If you and your spouse are both Minnesota residents and living in another state, your work-related income is not taxed by the other state under the federal MSRRA. You should ask your employer to either withhold Minnesota tax from your wages or not withhold the other state’s tax.
Your income and your spouse’s income are still subject to Minnesota tax. Your spouse may subtract federally taxable active-duty military pay from Minnesota taxable income. For more information, see Military Pay Subtraction.
Do I need to file a Minnesota income tax return?
You (and your spouse if filing a joint return) must file a Minnesota return if you are required to file a federal return. You must use the same filing status on your Minnesota return as on your federal return.
Note: You and your spouse may have to pay estimated tax to Minnesota if you expect to owe more than $500 after subtracting your Minnesota withholding and credits. For more information, see Estimated Tax.