To amend the Internal Revenue Code of 1986 to provide that members of the Armed Forces performing service in a contingency operation declared by the President shall be entitled (if the President so designates that operation for such purpose) to exclude from gross income military compensation received for active service in the same manner as if such service was performed in a combat zone, and for other purposes.

Amends the Internal Revenue Code to exclude from gross income military compensation received by enlisted personnel and commissioned officers of the armed forces for active service in a contingency operation zone in the same manner as if such service was performed in a combat zone. Increases the income exclusion limit to $2,400 for military compensation received by a commissioned officer for active service in a combat zone or a contingency operation zone.