What military pay can I subtract from my Montana income?
If you are a Montana resident receiving military compensation and if this compensation is included in your federal adjusted gross income, you can subtract your basic, special and incentive pay that you receive from serving on active duty as a member of the regular armed forces. This includes the following scenarios:
- You are serving on active duty as a member of the regular armed forces when you are a member of a reserve component of the armed forces or a member of the National Guard serving on active duty in a contingent operation as it is defined in 10 USC 101
- You are serving on active duty as a member of the regular armed forces when you are a member of the National Guard and assigned to active service authorized by the President of the United States or the Secretary of Defense for a period of more than 30 consecutive days for the purpose of responding to a national emergency declared by the president and supported by federal funds
If you receive wages under the combat zone exclusion
that are not included in your Form W-2
, Box 1, it will not
be included in your federal adjusted gross income, so
you should not subtract that pay again.
However, if you are a commissioned officer who could not exclude all of your wages received under the combat zone exclusion
because it exceeded the highest rate of enlisted pay for
each part of the month you served in a combat zone or
were hospitalized as a result of your service there, you may
include the additional combat pay that was included in your
federal adjusted gross income.
Military compensation that you have received from certain activities cannot be subtracted. Do NOT subtract the following:
- Salaries that you have received for annual training and weekend duty
- Salaries that you have received for being a member of a reserve component of the armed forces that is not received under 10 USC 101
- Salaries that you received for performing full-time
National Guard duty under Title 32 of the United
States Code (for example, Active Guard and Reserve,
Active Duty for Operational Support, or Active Duty for
Counter Drug that is not received under 10 USC 101)
- Retirement, retainer, equivalent pay or allowances
When you claim this exemption, you will need to include verification of your military status (such as your military orders) with your Montana tax return.