Desktop: Maryland Military Pay and Spouse Income – Support

Military Pay

Resident - If the taxpayer is a resident of Maryland they are subject to Maryland income tax on all income regardless of the source. This includes Active Duty Military Pay. There is an exception to this rule for resident active duty taxpayers who are stationed outside of the United States its possessions. Up to $15,000 may be subtracted so long as total military pay does not exceed $30,000. The military income earned while serving outside of the U.S. needs to be subtracted from income on the Maryland resident return by selecting:

Total Maryland Adjusted Gross Income
Subtractions to Income
Other Subtractions from Income
Other Subtractions from Income - Select New and Overseas military subtraction (limited to $15,000 per taxpayer).

Nonresident - If the taxpayer is a nonresident of Maryland stationed in Maryland whose only source of income is active duty military pay, they are not required to file an Maryland return.

One spouse is a resident of Maryland 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 Maryland 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 Maryland.

Maryland allows taxpayers to file as Married Filing Separately even when they have filed joint on their federal return. To change the filing status to MFS, from the Maryland resident tax return select:

Personal Information
Filing Status - Select Married Filing Separately.

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 Maryland, the following conditions must be met by the military spouse/employee:

The non-military spouse is not a member of the U.S. armed forces.
The non-military spouse is married to an active duty member of the U.S. armed forces.
The non-military spouse is domiciled in a state other than Maryland.
The service member's permanent duty station is in Maryland, an immediate neighboring state, or the District of Columbia.
The non-military spouse is residing and working in Maryland only to be the their military spouse while they are stationed in Maryland, an immediate neighboring state, or the District of Columbia

If the military spouse meets the eligibility requirements, they can avoid Maryland state tax from being withheld from their pay by providing their employer with Form MW507 and Form MW507M.

To claim a refund of taxes withheld from the Maryland income in error, from the nonresident Maryland Tax Return menu select: