Here are some financial/tax planning opportunities for those in the military

 

While Active Duty:

• Combat zone pay is excluded from federal (and sometimes state) income tax. This creates a rare opportunity: contribute tax-free dollars to a Roth account and still get tax-free growth and withdrawals.

• Thrift Savings Plan (TSP) – the military’s version of a 401(k), which often comes with up to a 5% match.

• You can stack Roth TSP with a Roth IRA, a rare double-Roth opportunity.

• Savings Deposit Program (SDP) – Deployed in a combat zone for 30+ consecutive days? You can contribute up to $10,000 to an SDP account earning a guaranteed 10% interest, compounded quarterly.

• BAH (Basic Allowance for Housing) is tax-free income and in high-cost areas, it’s substantial. Combine that with a VA loan and you’re building equity instead of paying rent.

VA Loan Hacks:

• Use it more than once. Sell, refinance, or use remaining entitlement.

• Own multiple properties. If you PCS, keep your old house as a rental and use a new VA loan to buy again.

• Buy a 2-4 unit multifamily and live in one, a perfect house hack.

• Seller concessions up to 4% of loan value can reduce your upfront cost.

• IRRRL (Interest Rate Reduction Refinance Loan) makes refinancing seamless with no appraisal or income verification.

• No prepayment penalty, ever.

Post-Service Planning:

• Military pension after 20 years

• Transition bonuses and relocation allowances

• TRICARE for Life, VA healthcare, and SBP (Survivor Benefit Plan)

• Start a solo 401(k) if doing any self-employed work, tactical training, consulting, contracting, etc.