New Jersey taxes military pay, but pay you earn in a combat zone is not taxed. The same exclusion covers pay you receive while hospitalized because of an injury you got in a combat zone. If the pay is excluded from your federal income taxes, it is excluded from your New Jersey income tax too.
There is nothing to apply for. Leave your combat zone pay out of the income you report on your New Jersey return.
Your Leave and Earnings Statements or orders showing your combat zone service dates, and your federal return showing the same pay excluded.
