Military Pay
Resident - If the service member is a resident of Indiana and stationed in Indiana, they are subject to Indiana income tax on all income regardless of the source. This includes active duty military pay, however there is a Military Service Deduction.
Military Service Deduction
Beginning in 2024, military personnel on active duty or in the active reserves may deduct the full amount of pay included in the taxpayer's federal adjusted gross income.
To deduct active duty military pay in TaxSlayer Pro, from the Indiana Tax Return menu select:
- Indiana Deductions
- Active Military Service Deduction
National Guard and Reserve Component Members Deduction
Service members eligible to claim the National Guard and Reserve Component deduction include members of the Indiana Army National Guard; Indiana Air National Guard; and members of the reserve components of the Air Force, Army, Coast Guard, Marine Corps, Merchant Marine, and Navy.
These service members are entitled to deduct the full amount of their qualified military income. This deduction should be reported on the IN Schedule 2 line 11, with code 621.
To enter National Guard and Reserve Component Members Deduction in TaxSlayer Pro, from the Indiana Tax Return menu select:
- Indiana Deductions
- Other Deductions
- Other Deduction - Select 621 - National Guard and Reserve Component Members Deduction and enter the amount.
Indiana follows federal law and provides income tax relief for servicemembers on active duty in combat zones.
Nonresident - If the taxpayer is a nonresident of Indiana stationed in Indiana whose only source of income is active duty military pay, they are not required to file an Indiana return.
One spouse is a resident of Indiana and the other is not - A servicemember’s spouse may elect, for income tax purposes, to use the same state of residence as the servicemember. If a servicemember is not a Indiana resident, and is instead a resident of another state, his or her spouse can elect to also be a resident of that state and not a resident of Indiana.
Indiana does not permit a filing status change from the federal return. If they are married filing joint on the federal return, they are required to file married filing joint on the Indiana return and the spouse will be required to use the same residency status as the servicemember.
Spouse Income - Military Spouses Residency Relief Act (MSRRA)
The MSRRA allows military spouses who reside with their service member spouse stationed in a nonresident state on military orders to keep their resident state for tax purposes. This means if the spouse has income from the nonresident state, they are not required to pay taxes to the nonresident state but report this income on their resident state return.
In order to be eligible for the income exemption under the MSRRA in Indiana , the following conditions must be met by the military spouse/employee:
- The employee’s spouse is a military servicemember;
- The employee is not a military servicemember;
- The employee’s military servicemember spouse has current military orders assigning him or her to a military location in Indiana;
- The employee and the military servicemember reside at the same address;
- The employee’s domicile is a state other than Indiana; and
- The employee’s military servicemember spouse’s domicile is the same as the employee’s domicile.
If the military spouse meets the eligibility requirements, they can avoid Indiana state tax from being withheld from their pay by providing their employer with Form WH-4MIL Annual Nonresident Military Spouse.
To claim a refund of taxes withheld from the Indiana income in error, from the Indiana Nonresident Tax Return menu select:
- Indiana Deductions
- Other Deductions
- Military Spouse Income Deduction - Select Yes to complete form IN-2058SP, the service member, the state of domicile, and answer the question about including the spouse income on the resident return.
Note: This is an article on reporting military pay and military spouse pay in the TaxSlayer Pro program. It is not intended as tax advice.
Additional Information:
IN DOR: Military Service Members
IN DOR: Current Year Individual Tax Forms
While TaxSlayer Pro strives to make the information and links contained on this page as timely and accurate as possible, TaxSlayer Pro makes no promise or guarantee about the timeliness, accuracy or completeness of the contents of this page. The information contained on this page is for general information and is not intended to be tax advice. The user is also encouraged to review the underlying state resources and publications.