Oregon Military Active Duty Pay: Tax Treatment and Filing Guidelines
Military active duty pay is treated differently for Oregon state income tax purposes compared to federal tax treatment. Oregon does not tax military pay earned while on active duty, provided the service member is stationed in Oregon or outside the state but serving in the U.S. military.
Key Points for Taxpayers
- Exclusion from Oregon Taxation: Military pay received while on active duty is not subject to Oregon state income tax. This applies whether the service member is stationed in Oregon or elsewhere in the U.S.
- Filing Instructions: When filing Form OR-40 or Form OR-40-N, military pay should be reported only in the federal column on line 7. The Oregon column should show $0 for military pay.
- Reporting on Schedules: On Schedule OR-ASC-NP, military wage income reported in the federal column should be entered only in the federal column, with $0 in the Oregon column.
- Why This Matters: Reporting military pay correctly ensures accurate calculation of Oregon tax liability and avoids overpayment or errors during processing.
Supporting Documentation and Resources
For detailed guidance, refer to the following official Oregon Department of Revenue publications and forms:
- Publication OR-17 (Individual Income Tax Guide): Provides comprehensive rules for filing Oregon income tax returns and explains how to handle military pay.
- Form OR-40 and Form OR-40-N: These are the primary forms used for filing Oregon personal income tax returns, including instructions for reporting military pay.
- Schedule OR-ASC-NP: Used to report additional income, including military wages, with separate federal and Oregon columns.
Source:
Publication OR-17 (Individual Income Tax Guide)
Form OR-40 (Oregon Individual Income Tax Return)
Form OR-40-N (Oregon Individual Income Tax Return for Nonresidents/Part-Year Residents)
Disclaimer: Always verify information with the official Federal or State Department of Revenue Forms and Instructions before filing your return.