What military pay qualifies for an Oregon subtraction?
If you included U.S. military pay in your federal adjusted gross income (AGI), you may qualify for a subtraction on your Oregon return.
The following qualifies for this subtraction.
- Military pay earned while stationed anywhere outside Oregon until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area.
- Guard and reserve pay earned while assigned away from home for 21 days or longer (entered in the Oregon National Guard and Reserve Pay section of this screen).
- Any remaining taxable military pay after the above amounts, up to $6,000.
Gertrude and Merlin are married, filing a joint return. Both are Oregon residents, and their address in the DFAS payroll records is in Oregon. Gertrude was on active duty overseas (not in a combat zone) this year. She had $21,000 active duty pay. Merlin served in the Oregon National Guard and was away from home overnight from April to July and again for two weeks in November. He served in Oregon when away from home. Merlin earned $1,500 military pay for his weekend drills. He also earned $8,000 while away from home from April to July and $1,000 for the two weeks in November. Gertrude and
Merlin will include $31,500 of military pay in their federal AGI. Then they will determine their Oregon subtraction.
- Stationed outside Oregon: All $21,000 of Gertrude's active duty pay is eligible for this subtraction because she was stationed outside Oregon.
- Guard and reserve away from home: $8,000 of Merlin's pay is eligible for this subtraction because he was away from home for more than 21 consecutive days from April to July. The pay he received for the two weeks he was away from home in November doesn't qualify.
- Other military pay: Gertrude doesn't have any other military pay not already eligible for the other subtractions. Merlin's remaining military pay is the $1,500 he earned for weekend drills and the $1,000 he earned for two weeks in November. The total for the remaining pay is $2,500, which is less than the $6,000 maximum allowed per military member, so he is allowed to subtract the entire $2,500.
Combined, Gertrude and Merlin have a military pay subtraction of $31,500.