Do Active Military Personnel Pay Taxes?
A lot of people who never served, or maybe are considering serving, assume that one of the benefits that comes with joining the military is you don’t have to pay taxes. But as those in uniform, their families, and Benjamin Franklin know: taxes are a certainty in life. Folks just have to pay them, and that goes for the military just like anyone else.
Federal Taxes for Military Personnel
The Internal Revenue Service’s rundown of how federal taxes apply to military personnel is contained in their Publication 3. Or, as it’s more descriptively called, the Armed Forces Tax Guide. If you have concerns or questions we don’t cover here, chances are the answers are in there. But the main thing to know is that your base pay is subject to the main federal taxes: Social Security, Medicare, and standard income tax.
Remember: your base pay is just your standard, basic salary. Things like military BAH, separation allowances, and hazardous/combat duty pay is not counted in that. Ergo, those extras and benefits are not subject to federal taxes. So you can rest assured your tax bill won’t go up if your BAH changes or you start accruing sea pay.
State Taxes for Military Personnel
While federal taxes for the military are pretty straightforward for all active personnel, your state taxes can vary widely. That’s because different states tax military personnel at different rates. A number of states don’t tax active duty military income at all. Other states exempt active duty personnel under certain circumstances, such as if they physically live out of state or make under a certain amount per year in base pay.
In most cases, to receive the tax breaks or exemption allowed by your state you’ll need to fill out and submit a state-specific waiver. Be sure to check what your state government’s policy is. Remember: the state taxes you pay are those in your legal home of record, even if that’s not where you happen to be stationed at a given time.
Taxes For Military Spouses
Military spouses with jobs pay federal taxes just like any civilian would in whatever line of work they’re in. Sorry if that’s disappointing to read, but that’s that.
State Taxes – MSRRA
Things are a little different when it comes to state taxes for military spouses. Don’t get too excited, they still have to pay the standard taxes of their state. But they do have a little leeway in deciding what that state is. And that’s because of the Military Spouse Residency Relief Act (or MSRRA).
In its original form, passed in 2009, the act allowed spouses living in states other than the one they’re legal residents of with their active duty service members can choose to pay which state they want to pay taxes in. It was updated in 2018 to allow for a third option: spouses can choose to pay taxes in the state their service member is a resident of. The purpose of the act was to allow military households ways to simplify their tax filing. And it gives spouses the chance to pick whichever applicable state has the most beneficial tax system.
Available Tax Services
All this is just information. Handy information to help you understand your tax situation, granted. But you still need to go through the process of actually paying your taxes. Civilians have to pick between paying a professional to do it for them or the headache of doing it themselves. But active duty personnel have some better options.
Short for Volunteer Income Tax Assistance, this is an IRS program that operates tax centers all over the country near military bases and communities. They provide any and all tax related services free of charge to active duty, reserve, and retired personnel. Their staff members are professional experts in military taxes. They’ll know exactly what you need to do to get yours in order this year. And it’s super easy to find the VITA location closest to you.
For those who prefer to file on their own or from home, or those who just don’t have access to a VITA office, MilTax has you covered. Provided by the DoD through Military OneSource, the program offers tax filing software as well as professionals you can chat with online, over the phone, or in person. All free for active duty personnel.
Nobody likes tax season, but that doesn’t change the fact that it comes up each and every spring. For each and every one of us, military personnel and their families included. But we hope the information here eases some of the headaches these weeks leading up to April 15th inevitably cause.