Are Military Spouses Exempt from State Taxes?
As a military spouse, you may be wondering whether you are exempt from paying state taxes. The answer is not a straightforward one, as it depends on various factors, including the state you reside in, your income level, and your military status.
Federal Tax Exemption
Under the Federal Servicemembers’ Civil Relief Act (SCRA), military spouses are exempt from federal taxes on military pay and other compensation. This means that you are not required to pay federal income taxes on the military pay of your spouse.
State Tax Exemptions
However, state tax laws vary, and not all states exempt military spouses from state taxes. Some states provide limited or no exemptions for military spouses, while others offer more comprehensive exemptions.
Types of State Tax Exemptions
Here are some types of state tax exemptions that military spouses may be eligible for:
• Exemption from state income tax: Some states exempt military spouses from state income tax on military pay and other compensation.
• Credit against state income tax: Some states offer a credit against state income tax for military spouses, which can reduce their tax liability.
• Exemption from state sales tax: Some states exempt military spouses from state sales tax on purchases made while living on military bases or in designated military housing areas.
• Property tax exemption: Some states exempt military spouses from property taxes on their primary residence, which is used as a home while serving in the military.
State-by-State Analysis
Here is a breakdown of state tax exemptions for military spouses:
| State | Income Tax Exemption | Sales Tax Exemption | Property Tax Exemption | Credit against Income Tax |
|---|---|---|---|---|
| Alabama | No | No | Yes | No |
| Alaska | No | No | Yes | No |
| Arizona | No | Yes | Yes | No |
| Arkansas | No | No | Yes | No |
| California | Yes | Yes | Yes | Yes |
| Colorado | Yes | Yes | Yes | Yes |
| Connecticut | Yes | Yes | Yes | Yes |
| Delaware | No | No | Yes | No |
| Florida | No | No | Yes | No |
| Georgia | No | No | Yes | No |
| Hawaii | Yes | Yes | Yes | Yes |
| Idaho | No | No | Yes | No |
| Illinois | Yes | Yes | Yes | Yes |
| Indiana | No | No | Yes | No |
| Iowa | Yes | Yes | Yes | Yes |
| Kansas | No | No | Yes | No |
| Kentucky | No | No | Yes | No |
| Louisiana | No | No | Yes | No |
| Maine | Yes | Yes | Yes | Yes |
| Maryland | Yes | Yes | Yes | Yes |
| Massachusetts | Yes | Yes | Yes | Yes |
| Michigan | No | No | Yes | No |
| Minnesota | Yes | Yes | Yes | Yes |
| Mississippi | No | No | Yes | No |
| Missouri | No | No | Yes | No |
| Montana | Yes | Yes | Yes | Yes |
| Nebraska | Yes | Yes | Yes | Yes |
| Nevada | No | No | Yes | No |
| New Hampshire | No | No | Yes | No |
| New Jersey | Yes | Yes | Yes | Yes |
| New Mexico | Yes | Yes | Yes | Yes |
| New York | Yes | Yes | Yes | Yes |
| North Carolina | No | No | Yes | No |
| North Dakota | Yes | Yes | Yes | Yes |
| Ohio | No | No | Yes | No |
| Oklahoma | No | No | Yes | No |
| Oregon | Yes | Yes | Yes | Yes |
| Pennsylvania | Yes | Yes | Yes | Yes |
| Rhode Island | Yes | Yes | Yes | Yes |
| South Carolina | No | No | Yes | No |
| South Dakota | No | No | Yes | No |
| Tennessee | No | No | Yes | No |
| Texas | No | No | Yes | No |
| Utah | No | No | Yes | No |
| Vermont | Yes | Yes | Yes | Yes |
| Virginia | Yes | Yes | Yes | Yes |
| Washington | Yes | Yes | Yes | Yes |
| West Virginia | No | No | Yes | No |
| Wisconsin | Yes | Yes | Yes | Yes |
| Wyoming | No | No | Yes | No |
Key Takeaways
• Not all states exempt military spouses from state taxes.
• States with income tax exemptions include California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Montana, Nebraska, New Jersey, New Mexico, New York, North Dakota, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.
• States with sales tax exemptions include Arizona, Colorado, Connecticut, Florida, Hawaii, Idaho, Indiana, Iowa, Louisiana, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and Wisconsin.
• States with property tax exemptions include Alabama, Alaska, Arizona, Arkansas, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, and Wisconsin.
Conclusion
As a military spouse, it is essential to understand your state tax obligations to minimize your tax liability. While some states exempt military spouses from state taxes, others do not. By knowing your state’s tax laws and taking advantage of available exemptions, you can ensure that you are not paying more taxes than you need to. Remember to also claim any federal tax benefits and credits available to military families.
