As career-minded service members rotate through a rising number of combat zones and hazardous duty areas, including the Persian Gulf, the Balkans, and now Afghanistan, they are learning, with encouragement from commands, to time their reenlistments to take advantage of tax breaks embedded in such assignments.
The effect on reenlistment rates on deployments into tax-free zones can be "awesome," said Vice Admiral Norbert Ryan, Chief of Naval Personnel.
Admiral Ryan noted, for example, that a six-year bonus for certain nuclear-qualified ratings amounts to $60,000, with half paid immediately and the rest in equal yearly increments through the enlistment period. When the reenlistment is executed while a ship transits the Red Sea, a combat zone, the entire bonus is tax free. Assuming that a nuclear-trained sailor ordinarily faces a 28% tax bite, reenlisting while in a combat zone can boost take-home pay on a six-year bonus by as much as $16,800.