Danger Pay types, conditions, and most importantly – is it taxed or considered creditable service?
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What is Danger Pay?
For civilian federal employees, ‘danger pay’ is compensation for service that is in addition to their basic rate-of-pay. The service that is eligible for such pay has to take place at one of several “Danger Pay Posts” around the globe, where it has been determined that “civil insurrection, terrorism, or war conditions threaten physical harm or imminent danger to all US Government civilian employees.” The use of the phrase ‘imminent danger’ in the definition may cause some confusion as there is a separate type of danger pay known officially as “imminent danger pay” but colloquially as “hazardous duty pay,” and is a type of compensation that is related to normal danger pay, but significantly different.
For regular danger pay, at least four hours must be spent at one of these posts. A civilian federal employee can be at these locations either on detail (Danger Pay under DSSR 040p) or temporary duty (TDY). If a civilian employee gets inadvertently stuck at one of these posts while in transit to another location, danger pay is applicable as long as the duration was four hours or longer. Similarly, if an employee isn’t on duty but still constrained to the danger post, danger pay can be claimed so long as it is four hours or more.
The full list of danger posts, along with the percentage added to basic pay, can be found here. The highest listed percentage is 35% for locations such as Baghdad, Iraq and Kabul, Afghanistan. Locations are reviewed periodically, so a designated area that is considered a “danger pay post” can be modified at any time. In the same vein, a location not considered dangerous for US civilian feds can be switched as well, at any given time the government deems appropriate.
Taxation and Credit
Danger pay is subject to income taxes. This type of compensation can at times be confused with “combat pay,” which is a monthly payment that applies to military service members serving in hazardous combat zones. While combat pay is tax-exempt, danger pay is not. Danger pay is also not creditable for retirement calculations, TSP contributions, or life insurance benefits.
Other Types
As aforementioned, Danger Pay under DSSR 652(g) is “imminent danger pay” and often referred to as hazard pay. This is a flat monthly payment of $225 for civilian feds working in hazardous environments. While it is possible to work in a place that is approved for both types, you can only claim one type at a time.
Also, there is a related type of compensation called the “post-hardship differential for political violence.” This, unlike hazard pay, can be paid simultaneously with danger pay, but the circumstances allowing such have to be reviewed, and the pay must be approved, by the employing agency. The definition for the post-hardship differential is relatively vague as well. The place of work whose employees are subject to this type of compensation includes locales where the “condition of environment” is “significantly different” than that in the (continental) USA.
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The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
