Active Duty Military Tax Relief Act of 2007 - Amends the Internal Revenue Code to: (1) allow certain small business owners (businesses having 100 or fewer employees) and self-employed individuals a tax credit for wages paid to members of the Ready Reserve of the Armed Forces and to temporary replacement employees for such members while on active military duty; (2) treat differential wage payments made to members of the Ready Reserve as earned income for tax withholding and retirement plan purposes; (3) allow the rollover of military death gratuities to individual retirement accounts, health savings accounts, Archer medical savings accounts, and education savings accounts; (4) increase the standard tax deduction by $1,000 in 2007 and 2008 for members of the uniformed services on active duty for more than 30 days; and (5) make permanent the taxpayer election to treat combat pay as earned income for purposes of computing the earned income tax credit and tax-free retirement plan distributions to individuals called to active duty.