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Last Updated: 12/18/2013

Active-Duty Military Pay Subtraction

Minnesota military members are allowed to subtract certain active-duty military pay from taxable income on their state return. This generally reduces the amount of income that is taxed by Minnesota.

This subtraction may be claimed by:

  • Members serving in the U.S. or U.N. armed forces who receive active-duty military pay that are subject to federal tax under U.S. Code Title 10.
  • Members of the Minnesota National Guard and Reserves, who receive taxable active-duty pay for services or compensation for training and meetings under U.S. Code Title 10 and Title 32, such as ADSW (ADOS), natural disaster emergency response and missing persons searches, and reenlistment bonuses.

Exception

The subtraction is not allowed for compensation received by Active Guard Reserves (AGR) or for employment by the Minnesota Department of Military Affairs.
 

If I am an active member of the U.S. or U.N. Armed Forces

You may subtract military pay for active service. To claim the subtraction:

Filing requirements

If you are a resident, you must file a Minnesota return unless:

Residency

If you were a Minnesota resident before enlisting in military service, you remain a resident, regardless of where you are stationed. For details, see Residency of Active-Duty Military Personnel.

If I am a member of the Minnesota National Guard and Reserves

You may subtract military pay for:

  • state or federal active service for natural disaster emergency response, missing person searches, and airport security duty; and
  • National Guard and Reserves duties, annual training and drill weekends. (For National Guard members, this includes training and meetings outside of Minnesota as well as within Minnesota.)

To claim the subtraction:

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 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 in Minnesota and exceeds the state minimum filing requirement.

If you file a Minnesota return:

Some income may be taxable

Minnesota does tax income from other sources, such as nonmilitary wages you receive or gambling winnings in the state.