Defense Department Worker’s Combat Zone Wages Aren’t Tax Exempt

A Defense Department employee can’t claim a federal exemption for wages earned in a combat zone on his California tax return because the exemption only applies to active service members, a California tribunal ruled in an opinion posted Monday.

Thomas Miller, a civilian employee of the department, argued that the income earned while he was deployed in Afghanistan wasn’t taxable. California law incorporates a federal statute excluding US armed forces members serving in a combat zone’s earned wages from the definition of gross income.

Miller argued his income for tax year 2018 was tax-exempt because he earned wages in an ...