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Last Updated: 12/10/2018

Military Pay Subtraction

If you are a military member and a Minnesota resident, you may subtract federally taxable active-duty military pay when determining your Minnesota tax.

Do I qualify for this subtraction?

You may claim this subtraction if any of the following apply:

  • You serve in the U.S. or U.N. armed forces and receive federally taxable active-duty military pay under U.S. Code, title 10.
  • You are employed for the full-time administration of the Minnesota Department of Military Affairs under Minnesota Statute 190.08, subdivision 3. If you are not paid under M.S. 190.08, subdivision 3, you do not qualify for this subtraction.
  • You serve in the Minnesota National Guard and Reserves, and you receive federally taxable active-duty pay for services or compensation for training and meetings under U.S. Code, titles 10 and 32. Examples include:
    • Active Duty Special Work (ADSW) or Active Duty Operational Support (ADOS)
    • Natural disaster emergency response, missing persons searches, and airport security duty
    • Re-enlistment bonuses
    • National Guard and Reserves duties, annual training, and drill weekends, including training and meetings inside or outside of Minnesota
    • Compensation for serving while assigned to Active Guard Reserves (AGR) under U.S. Code, title 32

What if I am a U.S. Public Health Officer?

The U.S. Public Health Service is a division of the U.S. Department of Health and Human Services. They oversee the U.S. Public Health Service Commissioner Corps under U.S Code, title 42. Officers of the Corps wear uniforms and have ranks similar to the U.S. Navy and Coast Guard, but they are not members of the armed forces as defined by U.S. Code, title 10.
You are only eligible for the income tax subtraction if you are called to active duty in the armed services under U.S. Code, title 10, when the President issues an executive order in time of war or emergency. At that time, you are declared a part of the military and may subtract your pay received for this period only.

If you are not a Minnesota resident, you may claim the subtraction under the Soldiers and Sailors Act, even though resident officers may not. 

What if I resided in another state when I enlisted?

You remain a resident of that state unless you take steps to change your legal residence (“domicile”) to Minnesota. For more information, 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 taxable to Minnesota and exceeding the state minimum filing requirement.

For more information, see Military Personnel – How Minnesota Taxes Your Income.