For U.S. military families, tax season offers unique opportunities to save, thanks to the special benefits and exemptions provided for active-duty members. With the year’s end fast approaching, now is the perfect time to take action to reduce your tax liability and maximize your financial resources.
Here are 10 smart moves tailored specifically for military middle-class families to make before December 31, 2024.
1. Maximize Contributions to Thrift Savings Plan (TSP)
The TSP offers a retirement savings option exclusively for military members and federal employees. Contributions to the traditional TSP lower your taxable income, while Roth TSP contributions grow tax-free.
MAX OUT! For 2024, the maximum amount an active-duty U.S. military member can contribute to their Thrift Savings Plan (TSP) is $23,000. Additionally, if you are 50 years old or older, you can contribute an extra $7,500 as a “catch-up” contribution, bringing your total possible contribution to $30,500 for the year.
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These contributions are an excellent way to save for retirement while taking advantage of tax benefits, so maximizing them before the end of the year can be a smart financial move.
Deploying? Take advantage of the Savings Deposit Program (SDP) for high-interest savings during deployment.
2. Use Tax-Free Combat Pay to Boost Retirement Savings
If you’ve earned combat zone pay, it’s tax-free, but you can still contribute to your Roth IRA or TSP Roth account, letting that tax-free income grow further without future taxation.
3. Claim the Military Spouse Residency Relief Act (MSRRA)
The MSRRA allows military spouses to maintain their home state residency for tax purposes, regardless of where they are stationed. This can mean significant savings, especially in states with no income tax.
4. Max Out Health Savings Accounts (HSAs)
Active-duty military families with a high-deductible health plan may qualify for an HSA. Contributions are tax-deductible, and funds used for medical expenses are tax-free. Check with TRICARE to determine if you qualify for an HSA-compatible plan.
5. Use Flexible Spending Accounts (FSAs) for Eligible Expenses
Military families with access to FSAs can save pre-tax dollars for healthcare and dependent care expenses. Use any remaining funds by the deadline—typically December 31 or March 15—to avoid forfeiting them. See MiliarySourceOne for details >>>
6. Leverage Education Benefits and Tax Credits
Military families often access tuition assistance or the Post-9/11 GI Bill, but don’t overlook tax credits like the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit for out-of-pocket tuition costs. Paying education expenses for dependents? Make those payments before year-end to claim the credit.
7. Make the Most of Tax-Free Housing Allowances
The Basic Allowance for Housing (BAH) is tax-free and doesn’t count toward your taxable income. Use this benefit to allocate more income toward tax-deferred or tax-free savings accounts, such as a Roth IRA or TSP.
8. Harvest Investment Tax Losses
If you have taxable investment accounts, sell underperforming assets to offset gains or reduce taxable income. Just remember the wash-sale rule—wait at least 30 days before repurchasing the same asset.
9. Donate to Charities Supporting Veterans and Service Members
Many military families feel strongly about giving back to their communities. Donations to qualified charities, including those supporting veterans, can be tax-deductible. Keep records of your donations, whether in cash or goods, to maximize deductions.
10. Claim the Energy Efficient Home Improvement Credit
Own a home? Military families stationed in the U.S. may qualify for credits on energy-efficient upgrades like new insulation, solar panels, or energy-efficient appliances. These improvements can save money and reduce your tax bill. For more info, see IRS >>>
Bonus Tip: Take Advantage of Free Military Tax Services
The Department of Defense offers MilTax, a free tax preparation and filing service specifically for military families. MilTax can help you identify benefits like the Earned Income Tax Credit (EITC) or exclusions for combat pay, ensuring you don’t miss out on valuable savings.
A Tax Strategy Built for Military Families
Military service comes with unique financial benefits, and these strategies can help middle-class military families keep more of their hard-earned money. By acting now, you’ll be ready for tax season and better positioned for financial success in 2025.
What’s your first move? Start today with these military-specific tips to lock in your savings before December 31!
IMPORTANT: If you want personal coaching on this or any money stuff, just schedule a FREE call with me, Coach JP Money and I will be happy to help.
Charles Bivona Jr aka “Coach JP Money”, is the founder of Coach JP Money. He is a seasoned expert in financial coaching and wealth-building. A multifaceted visionary, Charles is also a writer, global citizen, eco-activist, musician, artist, entertainer, entrepreneur, investor, life coach, and syndicated columnist.
Charles’ journey began with a solid education in accounting, finance, and business at the University of Nevada, Las Vegas, and California State University, Fullerton. At just 17, he made his first real estate investment with no money down, igniting a lifelong passion for financial independence. By 1998, he had achieved debt-free status and has been building wealth ever since.
As an entrepreneur, Charles owned and operated five national newspapers in the U.S. before transitioning to digital media. He founded and managed influential online platforms, including HireVeterans.com (2004–2020) and VT Foreign Policy (2004–2023).
A proud expat since the late 1990s, Charles resides in Baja, Mexico, with his wife whom he married in 1985. Together, they have three adult children and seven grandchildren. Their eco-conscious home, built with sustainable super-adobe techniques, is now a luxury retreat known as Hacienda Eco-Domes.
Under his music alias Johnny Punish, a name coined during his days fronting the underground punk band Twisted Nixon, he continues to inspire through his art and advocacy through his newest musical adventure; Punish Studios.
Today, as “Coach JP Money” Charles dedicates his life to helping others achieve financial mastery and personal success, sharing decades of experience and wisdom through his coaching, writing, and creative endeavors.
Read the full bio at PunishStudios.com >>>
