Pentagon Updates Hazardous Duty and Hostile Fire Pay Zones for Iran Conflict

Joe Wallace

The Pentagon has authorized hazardous duty / combat zone pay for United States troops in the Indian Ocean and at Diego Garcia. This hazardous duty pay update follows a March 20, 2026, missile attack when Iran targeted the area.

The authorization affects thousands, including those permanently assigned to the Diego Garcia Naval Support Facility and those on rotational or temporary duty. The Department of Defense utilizes two specific categories of benefits when on duty in these environments:

• Imminent Danger Pay (IDP), which is a payment for service in areas with a persistent threat of physical harm. It is prorated at 7.50 dollars per day, with a monthly maximum of 225 dollars.
• Hostile Fire Pay (HFP) is a payment triggered by a specific event of hostile fire or explosion. Unlike IDP, a single event entitles the member to the full 225 dollars for that month.

While a service member may qualify for both based on their experiences, the total monthly hazard pay benefit is capped at 225 dollars at press time. Eligibility is determined by official orders and physical presence within the designated geographic area.

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Combat Zone Designation Changes

The 2026 conflict has led to a “reclassification of risk” across the Indian Ocean and the Middle East. The military now authorizes danger pay or its equivalent for locations that include, but are not limited to:

• Diego Garcia
• Qatar
• United Arab Emirates
• The Persian Gulf
• The Red Sea
• The Gulf of Oman
• The Bab el Mandeb Strait
• The Northern Arabian Sea

Combat Zone Tax Exclusions

Those who receive this type of hazardous duty pay may be able to take advantage of the Combat Zone Tax Exclusion. Under this federal tax rule, enlisted members qualify to have all military compensation earned while serving in the zone exempted from federal income tax.

This shift in pay status is retroactive to the date of the March attack. The Defense Finance and Accounting Service is responsible for processing back pay for members who were present during these operations.

If you need to apply for Combat Zone Tax Exclusions, check the IRS official site to see the most current official list for approved tax exclusion combat zones. The IRS official site reminds troops, “If you are an enlisted member, warrant officer, or commissioned warrant officer, none of your combat zone pay is included in your income for tax purposes.”

You may be able to exclude pay for service in a combat zone, “even though that pay would otherwise be taxable,” according to the IRS.  This is not tax advice; consult the IRS or a tax professional if you have questions about combat zone tax exclusions.

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Historical Context

In the early 21st century, hazard pay was largely confined to land-based operations in Iraq and Afghanistan. Revised 2026 combat zone guidelines acknowledge that the range of certain military weapon systems used in the area has expanded to 2,500 miles, removing the geographic “buffer” that previously defined Diego Garcia and the areas near it as a safe “rear area.”

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