To amend the Internal Revenue Code of 1986 to extend to civilian employees of the Department of Defense serving in combat zones the tax treatment allowed to members of the Armed Forces serving in combat zones.

Amends the Internal Revenue Code to: (1) exclude from gross income compensation earned by certain Department of Defense civilian employees on active service in a combat zone; (2) qualify such employees for reduced estate tax rates; and (3) exempt such employees from the toll tax on telephone service originating within a combat zone.