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Last Updated: 2/24/2015

Military Pay Subtraction

Active Duty Military Pay

Members of the military who are Minnesota residents may subtract federally taxable active-duty military pay when determining their Minnesota tax.

This subtraction may be claimed by:

  • Members serving in the U.S. or U.N. armed forces who receive federally taxable active-duty military pay under U.S. Code,
    Title 10.
  • Members of the Minnesota National Guard and Reserves, who receive federally taxable active-duty pay for services or compensation for training and meetings under U.S. Code, Title 10 and Title 32. Examples include:
    • Active Duty Special Work (ADSW) or Active Duty Operational Support (ADOS)
    • Natural disaster emergency response and missing persons searches
    • Re-enlistment bonuses
The subtraction is not allowed for compensation received for employment by the Minnesota Department of Military Affairs or the United States Public Health Service unless received for service after being called to Active Duty under Title 10.

Minnesota National Guard Pay

Minnesota National Guard members may subtract federally taxable pay for the following types of service:
  • State or federal active service for natural disaster emergency response, missing person searches, and airport security duty.
  • National Guard and Reserves duties, annual training and drill weekends. (For National Guard members, this includes training and meetings, whether inside or outside of Minnesota.)

New for 2014

Beginning in 2014, the subtraction is now allowed for compensation received for service by a Minnesota resident serving in the National Guard while assigned to Active Guard Reserves (AGR) under Title 32.

What if I am not a resident of Minnesota?

If you were a resident of another state when you enlisted, you remain a resident of that state unless you take steps to change your legal residence (or “domicile”) to Minnesota. For details, see Residency of Active-Duty Military Personnel.

If you are not a Minnesota resident, Minnesota will not tax your military pay or your spouse’s wages (in most cases). You are not required to file a Minnesota return unless you have other income that is taxable to Minnesota and exceeds the state minimum filing requirement.

Residency Scenarios