Military Service and Ohio Taxes

(Includes general information, state of residence for military, income other than as a servicemember, combat zone provisions, spouse and retired provisions, and additional provisions for members of the Guard and Reserve.)

General Information

• All Ohio residents, including those serving in the military, are subject to the Ohio individual income tax and school district income tax.

• However, a change in law for taxable years beginning on and after January 1, 2007 allows for the deduction of your military pay you receive for active duty service while you are stationed outside the state (see below).

  Division (A)(24) of Ohio Revised Code section 5747.01 provides that for taxable years beginning on and after January 1, 2007 an Ohio resident service member can deduct military pay and allowances received during a taxable year while the service member is stationed outside Ohio to the extent these amounts are included in federal adjusted gross income.

• The term “stationed” refers to an Ohio resident service member’s permanent place of military duty. Periods of training in which a service member, either individually or as part of a unit, departs his/her permanent place of duty and then returns, following the completion of the training, is not included in the definition of “stationed.”
• Military pay and allowances for service members of all military components who are Ohio residents stationed inside Ohio will continue to be subject to Ohio individual income tax and also to school district income tax if the service member is domiciled in a taxing school district.

• Examples of military pay and allowances which do qualify for this deduction include the following:
  • Military pay and allowances received while a member of the Active Component of the U.S. Armed Forces and assigned to a permanent duty station outside Ohio.
  • Military pay and allowances received while a member of the National Guard or the Reserve Components of the U.S. Armed Forces in an active duty status, other than training status not described below, outside Ohio.
  • Military pay and allowances received while a member of a unit of the National Guard or the Reserve Components of the U.S. Armed Forces under federal mobilization orders in which the unit mobilizes for training at a non-Ohio location followed by an operational deployment to any non-Ohio location.
  • Military pay and allowances received by cadets at the U.S. service academies – the Military Academy, the Naval Academy, the Air Force Academy and the Coast Guard Academy. Cadets are serving on active duty under the provisions of 38 United States Code section 101 (21) and are eligible for this deduction for the pay they receive while stationed at these facilities to the extent that this pay is included in federal adjusted gross income (line 1 on the Ohio income tax return). However, this deduction is not available for pay received for service in the Reserve Officer Training Corps.
    

• Note: a servicemember cannot deduct pay for service in a combat zone if that pay is not included in federal adjusted gross income (line 1 on form IT 1040).

• Service members eligible for this deduction may request that the military exempt them from Ohio withholding only during the period of their service outside the state by submitting Ohio form IT 4 MIL to their military finance office.

• Examples of military pay and allowances which do not qualify for this deduction include the following:
  • Military pay and allowances received while a member of the Active Component of the U.S. Armed Forces who is assigned to a permanent duty station inside Ohio and who departs Ohio for a period of temporary duty for unit or individual training (e.g., training exercises, basic and advanced training courses, and additional skill training courses).
• Military pay and allowances received while a member of the National Guard or the Reserve Components of the U.S. Armed Forces in an Active Duty for Training status who departs Ohio for a period of temporary duty for unit or individual training (e.g., basic and advanced individual training, unit annual training, training exercises, basic and advanced training courses, and additional skill training courses).

• For taxable years 2006 and prior, the deduction described above is not available..

State of Residence for Military

• The military automatically withholds state tax for the state that was your legal residence at the time you entered the service. This state and the address at which you resided is your home of record. The military considers this to be the place to which you will return when you separate from the service, and pays you travel and transportation allowances to your home of record address at the time of your separation. The state of your home of record address is considered your state of legal residence unless you take action with the military to change it. Your home or record may be in a different state than your state of legal residence if your have changed your state of legal residence during your service.
• You are an Ohio resident if Ohio is indicated as your state of legal residence on DD Form 2058, "State of Legal Residence Certificate," or equivalent (e.g. home of record), in your military personnel record. For purposes of Ohio income taxes, if you are a member of the military and if Ohio is indicated in your military personnel record as your state of legal residence, then you are domiciled in Ohio.
• You cannot claim to be a non-Ohio resident for income tax purposes if Ohio is indicated as your state of legal residence on DD Form 2058, "State of Legal Residence Certificate," or equivalent (e.g. home of record), in your military personnel record.
• If an active duty service member who was an Ohio resident has changed their state of legal residence during or prior to the taxable year, complete form IT DA-M (affidavit of non-Ohio domicile-military). Military personnel stationed outside Ohio and who are claiming to have a home-of-record outside Ohio for tax year 2007 must file by May 30, 2008. (Note: changing your residency may impact the ability of you and/or your family members to obtain in-state tuition at an Ohio university, your ability to vote in Ohio, or to obtain or keep an Ohio driver's license, etc.) If Ohio tax was mistakenly withheld, you should submit U.S. Department of Defense form DD 2058 or its equivalent to the applicable military authorities to change your military state of residence. See the Ohio Individual Income Instructions booklet for 2007; specifically, the line 36 instructions on page 19, for more information.   
• Ohio residents paying tax on income earned other than as a servicemember in another state or the District of Columbia may calculate an Ohio resident tax credit.
• Additional information on residency questions.
• Tax-specific information:
  • Individual Income Tax
  • 2007 Ohio Income Tax Return and Instructions
  • School District Income Tax
• To check an address and find what school district it's in:

• Visit The Finder to locate a school district number by address.
• 2007 Ohio School Districts
• 2007 School District Income Tax Instructions

Income other than as a Servicemember

• Any pay or profits earned in Ohio other than as a servicemember by an active duty military member is subject to Ohio income tax, regardless of the military member’s state of residency.  You can view the revisions to the form and instructions by visiting our tax forms page.
• Other types of Ohio-sourced income, such as rental income from an Ohio location or Ohio lottery winnings, are taxable for service members, regardless of residency.
• For more information, see "What if I am in the military?" on pages 6 -7 of the 2007 Ohio Income Tax Return and Instructions.  (Note: Line 37 applies to military nonresidents.)

Military Nonresidents

• If your state of legal residence (e.g. home of record) in your military personnel record is not Ohio, you are a military nonresident and are not subject to Ohio income tax on your military pay.

• Therefore, if you are a military nonresident stationed in Ohio, you may not have to file an Ohio income tax return, if all of the following are true: (i) you are a military nonresident, (ii) your filing status on your IRS income tax return is single, married filing separately, qualifying widow(er), or head of household, and (iii) you have no Ohio income other than your military compensation. Also, if the filing status on your IRS income tax return is married filing jointly and if you and your spouse have no Ohio income other than military compensation, you do not need to file an Ohio income tax return.

• To avoid a possible tax assessment based on filing address, military nonresidents are encouraged to complete and file an IT 10 form annually, if applicable.

• However, you will have to file an Ohio income tax return if any of the following applies to you: (a) you earned compensation in Ohio other than as a service member; or (b) you had income from other Ohio sources such as (i) rental income from Ohio property,  (ii) capital gains from the sale of Ohio property, (iii) Ohio Lottery Commission prizes and awards, or (iv) income from a pass-through entity doing business in Ohio; or (c) your IRS income tax return status was married filing jointly, and your spouse had nonmilitary income or gain from any Ohio source.
• For additional general information, see "What if I am in the military?" on pages 6 -7 of the 2007 Ohio Income Tax Return and Instructions.  (Note: Line 37 applies to military nonresidents.)

Spouse

• Income earned in Ohio by the nonmilitary spouse of an active duty military member is subject to Ohio income taxes.

Change to Soldiers’ and Sailors’ Civil Relief Act

• Congress passed an update to the Soldiers’ and Sailors’ Civil Relief Act in December 2003. This update, the Service Members Civil Relief Act, forbids any state from using military pay to calculate the household tax bracket of a nonresident service member or spouse. This act is discussed in more detail in Information Release IT 2004-01. This release also applies to the current taxable year.  

Combat Zone Provisions

• Any active duty taxpayer assigned to a federally-designated combat zone and any taxpayer who is a member of the National Guard or a Reserve Component serving on active duty and assigned to a federally-designated combat zone is eligible for tax relief. All federal income tax relief provisions for service in a combat zone also apply to Ohio taxes.
• Pay earned while serving in a combat zone, including base pay, hostile fire and imminent danger pay, is excluded from federal income tax and also from Ohio income and school district income tax. The only exception to this is for commissioned officers, whose combat zone pay exclusion is capped at the highest enlisted grade plus hostile fire and imminent danger pay.
• Income tax filings and payments for these individuals are extended for 180 days beyond the period of service in the combat zone. This extension can be lengthened by any time spent in missing-in-action status, as well as time in continuous hospitalization from injuries suffered in the combat zone. These provisions, discussed in more detail in Information Release IT 2002-01. This release also applies to the current taxable year. 

Additional Provisions for Members of the Guard and Reserve

• Ohio taxpayers who are members of the Ohio National Guard or a Reserve Component of the U.S. Armed Forces and are called to active duty for any reason are eligible for an extension for filing and payment of individual and/or school district income taxes during the period of their service and for 60 days after the termination of their duty. If the taxpayer is serving on active duty in a federally-designated combat zone at the time the tax return is due to filed, the tax relief measures discussed above in "Combat Zone Provisions" apply.
• A member of the Ohio National Guard or a Reserve Component of the U.S. Armed Forces who is called to active duty for any reason is granted an extension of time to pay real property and manufactured home taxes until the seventh month after termination of the member’s active duty service.

Retirement and Survivor Benefit Income

• For taxable year 2007 and prior years, military retirement income is subject to Ohio individual income tax, but is eligible for a credit of up to $200. Income from a survivor benefit plan is also treated as retirement income and is eligible for the same credit.

• Military retirement income may also be subject to school district income tax, if the taxpayer resides in a district that levies the tax.
• Effective for taxable years beginning after Dec. 31, 2007, military retired pay and SBP benefits are exempt from state income tax and school district income tax. This pay can be deducted from federal adjusted gross income. Eligible taxpayers can contact the Defense Finance and Accounting Service to request an adjustment of their Ohio withholding. Federal civil service retirees who received credit for their military service can deduct only that portion of their pension.

• For additional information, see Q & A #10 in the "Q & A’s Regarding Military Servicemembers’ Residency and other Ohio Military Tax Issues" section.
  

Have questions?

• The Ohio Department of Taxation Web site has more information on Ohio taxes. You can also contact any of our Taxpayer Service Centers, or E-mail us for a prompt answer to your questions.

You can call toll free for Forms (1-800-282-1782) or Taxpayer Assistance (1-800-282-1780.)