If I remember correctly, in a combat zone, enlisted pay is already tax free. For officers, it was a percentage that was tax free. Other incentives such as imminent danger pay were also tax free.
That is correct. When my husband was in Vietnam in 1967/68 and then again in 1971. his pay was excempted, but after he retired he had to make up for it. But what the congressman sugeests is that all military pay, regardless if the troops are in a war zone or not should be excempted. At least that is the way I read it.
Officer pay in combat used to be tax free for the first $500. It has changed to be tax free for the amount equivalent to the SGM of the army pay, so about 6500. So LTC and higer are the only officers to pay some tax.
It is all tax free for officers too. It is on a month by month basis. If you spend 1 April in Iraq, all of April's pay is tax free.