Department of Defense
INSTRUCTION
NUMBER 1340.25
September 28, 2010
USD(P&R)
SUBJECT: Combat Zone Tax Exclusion (CZTE)
References: See Enclosure 1
1. PURPOSE. In accordance with the authority in DoD Directive 5124.02 (Reference (a)), this
Instruction establishes policy, assigns responsibilities, and provides procedures governing the
designation of areas in which members of the U.S. Armed Forces are eligible for the CZTE, and
the periodic review of such designations.
2. APPLICABILITY. This Instruction applies to OSD, the Military Departments (including the
Coast Guard at all times, including when it is a Service in the Department of Homeland Security
by agreement with that Department), the Office of the Chairman of the Joint Chiefs of Staff and
the Joint Staff, the Combatant Commands, the Office of the Inspector General of the Department
of Defense, the Defense Agencies, the DoD Field Activities, and all other organizational entities
within the Department of Defense (hereafter referred to collectively as the “DoD Components”).
3. DEFINITIONS. See Glossary.
4. POLICY
. It is DoD policy that:
a. A member of the U.S. Armed Forces (hereafter Armed Forces) may be eligible for the
CZTE in accordance with section 112 of title 26, United States Code (U.S.C.); section 1.112-1 of
title 26, Code of Federal Regulations (CFR); Public Laws 104-117 and 106-21; and chapter 44 of
Volume 7A of DoD 7000.14-R (References (b) through (f), respectively).
b. A member of the Armed Forces is entitled to the CZTE if for any period during a calendar
month the member performs active service in:
(1) A combat zone (CZ) designated by the President in an executive order; such
executive order shall be listed in chapter 44 of Reference (f);
