About two thirds of the eligible government employees are in Iraq, the rest in Afghanistan. Paying bonuses for serving is isolated or dangerous places is an old practice with the government bureaucracy.
U.S. bureaucrats are qualifying for combat benefits. This is part of a trend that is giving such benefits to an increasing number of people. The American military learned, even before the war in Iraq came along, that non-combat troops would be in harm's way. But in Iraq and Afghanistan, there are some 2,000 civilian U.S. government employees (including the State Department and Department of Defense) serving in dangerous circumstances. While some of these people get "danger pay," all will now get the same tax breaks the troops get. That means up to $6,724 of monthly income is exempt from federal income tax. Federal contractors, if they meet certain requirements, they get a tax break on up to $80,000 of their foreign earned income.