If you elect a state other than Virginia under SCRA, the following two types of income are exempted from Virginia individual income tax:
- A servicemembers' active duty pay, and
- A spouses' income from Virginia sources for services performed (such as wages received as an employee).
Spouse's self-employment income: A spouse's income from self-employment may or may not qualify as SCRA protected income. Such income would qualify only if the predominant source of the business' income is from the spouse's performance of services. If the spouse's business does not employ others and does not employ significant capital, then the predominant source of the business' income is from the spouse's performance of services.
