§ 112.
(a)
Enlisted personnel
Gross income does not include compensation received for active service as a member below the grade of commissioned officer in the Armed Forces of the United States for any month during any part of which such member—
(1)
served in a combat zone, or
(2)
was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
(b)
Commissioned officers
Gross income does not include so much of the compensation as does not exceed the maximum enlisted amount received for active service as a commissioned officer in the Armed Forces of the United States for any month during any part of which such officer—
(1)
served in a combat zone, or
(2)
was hospitalized as a result of wounds, disease, or injury incurred while serving in a combat zone; but this paragraph shall not apply for any month beginning more than 2 years after the date of the termination of combatant activities in such zone.
With respect to service in the combat zone designated for purposes of the Vietnam conflict, paragraph (2) shall not apply to any month after January 1978.
(c)
Definitions
For purposes of this section—
(1)
The term “commissioned officer” does not include a commissioned warrant officer.
(2)
The term “combat zone” means any area which the President of the United States by Executive Order designates, for purposes of this section or corresponding provisions of prior income tax laws, as an area in which Armed Forces of the United States are or have engaged in combat.
(3)
Service is performed in a combat zone only if performed on or after the date designated by the President by Executive Order as the date of the commencing of combatant activities in such zone, and on or before the date designated by the President by Executive Order as the date of the termination of combatant activities in such zone.
(4)
The term “compensation” does not include pensions and retirement pay.
(5)
The term “maximum enlisted amount” means, for any month, the sum of—
(A)
the highest rate of basic pay payable for such month to any enlisted member of the Armed Forces of the United States at the highest pay grade applicable to enlisted members, and
(B)
in the case of an officer entitled to special pay under section 310, or paragraph (1) or (3) of section 351(a), of title 37, United States Code, for such month, the amount of such special pay payable to such officer for such month.
([Aug. 16, 1954, ch. 736], [68A Stat. 34]; [Pub. L. 89–739, § 1], Nov. 2, 1966, [80 Stat. 1165]; [Pub. L. 92–279, § 1], Apr. 26, 1972, [86 Stat. 124]; [Pub. L. 93–597, § 2(a)], (b), Jan. 2, 1975, [88 Stat. 1950]; [Pub. L. 94–569, § 3(b)], Oct. 20, 1976, [90 Stat. 2699]; [Pub. L. 104–117, § 1(d)], Mar. 20, 1996, [110 Stat. 828]; [Pub. L. 104–188, title I, § 1704(t)(4)(A)], Aug. 20, 1996, [110 Stat. 1887]; [Pub. L. 113–295, div. A, title II, § 221(a)(18)], Dec. 19, 2014, [128 Stat. 4039]; [Pub. L. 114–328, div. A, title VI, § 618(k)], Dec. 23, 2016, [130 Stat. 2161].)