U.S. military personnel, whether on active duty or reserve service, must follow the country's general tax rules. Military personnel tax duties, however, can sometimes be more complicated than those faced by civilians. Plus, the issue of combat affects not only families, but also military members' taxes.
In this way, what states are tax exempt for Military?
Nine states have no income tax. Of the 41 that do, 14 of them—Alabama, Hawaii, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Pennsylvania and Wisconsin—exempt all military pensions from taxation, according to the National Conference of State Legislatures.
Is military pay exempt from federal taxes?
*NOTE: States that follow federal rules tax military pay to the same extent that it is taxable for federal income tax purposes. Under federal law, compensation that noncommissioned military personnel receive for active-duty service in a combat zone is not included in gross income and thus is exempt from tax.
Is military pay taxes when deployed?
Members of the armed forces do not have to pay taxes on income received while they are on duty in an area designated as a combat zone. If you are a commissioned officer, your pay in a combat zone is excluded from taxes, but the amount is limited to the highest rate of enlisted pay for a month.