Your state of legal residence — not your current duty station — generally controls whether military base pay is subject to state income tax, because SCRA typically prevents the duty-station state from taxing military members solely on the basis of being stationed there. Nine states have no state income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For an E-6 earning approximately $57,000 in base pay, establishing legal residence in a no-income-tax state versus a 5% state saves approximately $2,800 per year — roughly $56,000 over a 20-year career.
Quick Answer
- For military wages, SCRA generally prevents your duty-station state from taxing you solely because you are stationed there — your state of legal residence (domicile) controls state income tax on military pay
- Nine states have no state income tax at all: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming
- Many additional states have enacted full or partial exemptions specifically for active-duty military pay — the list has grown significantly in recent years
- For an E-6 earning approximately $57,000 in base pay, moving from a 5% income tax state to a no-income-tax state saves approximately $2,800/year — roughly $56,000 over a 20-year career
- State tax laws change frequently. Verify your specific situation with your state tax authority or a military tax resource before making decisions based on this information.
Important: This guide reflects our best understanding of 2026 state tax rules for active-duty military members. State tax laws change frequently, and exemptions often depend on domicile, duty location, filing elections, and SCRA/MSRRA/VBTA rules specific to your situation. This is educational information, not tax advice. Before changing your state of legal residence or filing based on an exemption, verify with your state department of revenue, Military OneSource, your installation legal assistance office, or a qualified tax professional.
Most service members know that BAH and BAS are excluded from federal taxable income. Fewer realize that the state they claim as their legal residence — not where their orders send them — determines whether their base pay itself gets taxed at the state level. That decision is one of the most controllable financial levers in military life.
Why state taxes matter more for military than for civilians
Under the Servicemembers Civil Relief Act (SCRA), your duty station state cannot tax your military pay if you're not a legal resident of that state. A service member stationed in California but with a legal residence in Texas pays no California state income tax on their military wages.
This means the relevant question isn't "where are you stationed?" — it's "where is your state of legal residence, and how does that state treat military pay?"
Different types of military income are controlled by different rules. Before looking at state-by-state exemptions, it helps to understand which rule applies to which income:
| Income type | What controls state taxation |
|---|---|
| Active-duty military wages (base pay, special pays) | Your state of legal residence (domicile) — SCRA prevents duty-station state from taxing |
| BAH and BAS | Generally excluded from federal taxable income; most states follow federal treatment, but verify state-specific rules if filing in a complex state |
| Spouse's civilian wages | Duty-station state — unless spouse makes MSRRA/VBTA election |
| Rental income from property in another state | The state where the property is located, regardless of your domicile |
| Investment income (dividends, capital gains) | Your state of legal residence — but some "no-income-tax" states tax investment income separately |
| Reserve/Guard drill pay | Varies by state — not always treated the same as active-duty pay |
For an E-6 with 10 years of service earning approximately $57,000 in base pay:
| State Income Tax Rate | Annual Tax on Military Pay | 20-Year Total |
|---|---|---|
| 0% (no income tax or full exemption) | $0 | $0 |
| 3% | ~$1,710 | ~$34,200 |
| 5% | ~$2,850 | ~$57,000 |
| 7% | ~$3,990 | ~$79,800 |
These figures are rough approximations for illustration — actual tax varies by filing status, deductions, and each state's specific rate structure. These examples don't account for promotions, longevity increases, deployments, spouse income, deductions, or changes in state law. The actual lifetime difference could be higher or lower. Your state of legal residence is worth real money.
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Open Calculator →The nine states with no income tax
These states impose no income tax on earned income. Military pay — like all earned income — is completely untaxed by the state, regardless of military status.
- Alaska — No state income tax
- Florida — No state income tax
- Nevada — No state income tax
- New Hampshire — No tax on wages or earned income; however, other taxes (such as taxes on investment income or other non-wage income) may apply — verify current rules
- South Dakota — No state income tax
- Tennessee — No state income tax on wages (eliminated its investment income tax in 2022)
- Texas — No state income tax
- Washington — No state income tax on wages; however, a capital gains tax applies to certain investment income — verify current rules if you have investment income
- Wyoming — No state income tax
If your legal residence is one of these states, your military base pay is entirely free from state income tax.
States that fully exempt active-duty military pay
These states have a state income tax but specifically exempt active-duty military pay for their residents. The legislation behind these exemptions has expanded significantly over the last several years as states have competed to attract military families and honor service members' contributions.
Based on current available state guidance, the following states generally provide broad exemptions for active-duty military pay. Conditions, forms, residency status, and filing requirements may still apply.
- Arkansas — Active-duty military pay exempt
- Arizona — Active-duty military pay subtraction available; verify filing form and current instructions with AZ DOR
- Illinois — Military pay fully exempt under state statute
- Indiana — Active-duty pay exempt
- Iowa — Military pay exempt for active-duty members
- Kansas — Active-duty pay exempt
- Kentucky — Active-duty military pay exempt; verify filing instructions if you have non-military Kentucky-source income
- Louisiana — Active-duty military pay exempt
- Michigan — Active-duty pay exempt
- Minnesota — Military pay exempt for active-duty members
- Mississippi — All active-duty military pay fully exempt
- Missouri — Active-duty military pay exempt
- Nebraska — Military pay exempt
- New Jersey — Active-duty military pay exempt
- New Mexico — Active-duty military income exempt from New Mexico personal income tax; file the appropriate adjustment form if required
- Ohio — Active-duty pay exempt
- Oklahoma — Active-duty military pay exempt
- Oregon — Pay from active federal service exempt
Note: Even states with broad exemptions may have conditions, income thresholds, filing form requirements, or residency conditions. Confirm your state's current rules with the state department of revenue or a military tax resource.
States with partial exemptions or complex rules
These states have some form of military pay benefit, but the rules involve thresholds, conditions, or situations that make a blanket statement difficult. Verify the specific rules with your state.
- Colorado — Military pay subtraction available up to a specified annual amount (verify current limit for 2026)
- Connecticut — Connecticut residents may still owe tax unless they meet nonresident-treatment conditions; verify with CT DRS
- Delaware — Some military pay deductions available (verify)
- Georgia — Military pay exemption available (verify current rules and amounts)
- Hawaii — Partial military pay exemption (verify)
- Idaho — Some military pay deductions (verify)
- Maine — Some exemption available for active-duty members (verify)
- Maryland — Military pay subtraction available (verify current amount)
- Massachusetts — SCRA protects non-domiciled members; resident exemptions depend on facts; verify with MA DOR
- Montana — Some military pay deductions (verify)
- North Carolina — Active-duty pay may be exempt for members stationed outside NC or in certain categories (verify)
- North Dakota — Official sources conflict or depend on resident vs. nonresident status and recent legislative changes; verify directly with ND Tax Commissioner before relying on any exemption
- Pennsylvania — Active-duty pay may be exempt when serving outside Pennsylvania; duty location and documentation requirements apply — verify with PA DOR
- Rhode Island — Military pay exemption (verify current rules)
- South Carolina — Some military pay exemption available (verify current threshold and rules)
- Utah — Military pay deductions available (verify)
- Vermont — Some military pay exemptions (verify)
- Virginia — Non-domiciled members protected by SCRA; Virginia-domiciled members should verify current exemption rules with Virginia Tax
- West Virginia — Military pay exemption (verify current rules)
- Wisconsin — Military pay deductions available (verify)
States that tax military pay with no broad exemption
These states generally tax their residents' military pay without a broad active-duty exemption. Being a legal resident of one of these states while serving means you may owe state income tax on your base pay.
- Alabama — Military pay generally taxable; verify whether any exemptions apply for your situation
- California — California's FTB guidance indicates that a military member domiciled in California but stationed outside California may be treated as a nonresident for tax purposes during that period, and active-duty military pay may not be California-source income. However, California domicile and residency analysis can be complex — verify directly with FTB or a military tax professional.
- New York — Some exemptions available; verify current rules
The 50-state reference
Note: "Fully exempt" in this table reflects our best understanding of each state's general treatment of active-duty military pay — but exemptions often come with conditions such as residency requirements, income thresholds, or specific filing elections. Even states listed as "fully exempt" may have edge cases. Verify your state's current rules with the state department of revenue before making legal residence decisions.
| State | Treatment | Notes |
|---|---|---|
| Alabama | Verify | No broad exemption confirmed; verify current rules |
| Alaska | No income tax | — |
| Arizona | Fully exempt | Active-duty military pay subtraction available; verify filing form and current instructions with AZ DOR |
| Arkansas | Fully exempt | Active-duty pay exempt |
| California | Complex/verify | FTB guidance: members stationed outside CA may qualify as nonresidents; domicile rules are strict — verify with tax professional |
| Colorado | Partial | Subtraction available; verify current amount |
| Connecticut | Complex/verify | Connecticut residents may still owe tax unless they meet nonresident-treatment conditions; verify with CT DRS |
| Delaware | Partial/verify | Some deductions available; verify |
| Florida | No income tax | — |
| Georgia | Partial/verify | Exemption available; verify current rules |
| Hawaii | Partial/verify | Partial exemption; verify |
| Idaho | Partial/verify | Some deductions; verify |
| Illinois | Fully exempt | Military pay fully exempt |
| Indiana | Fully exempt | Active-duty pay exempt |
| Iowa | Fully exempt | Military pay exempt |
| Kansas | Fully exempt | Active-duty pay exempt |
| Kentucky | Fully exempt | Active-duty military pay exempt; verify filing instructions if you have non-military Kentucky-source income |
| Louisiana | Fully exempt | Active-duty pay exempt |
| Maine | Partial/verify | Some exemption; verify |
| Maryland | Partial/verify | Subtraction available; verify amount |
| Massachusetts | Complex/verify | SCRA protects non-domiciled members; resident exemptions depend on facts; verify with MA DOR |
| Michigan | Fully exempt | Active-duty pay exempt |
| Minnesota | Fully exempt | Military pay exempt |
| Mississippi | Fully exempt | All military pay fully exempt |
| Missouri | Fully exempt | Active-duty pay exempt |
| Montana | Partial/verify | Some deductions; verify |
| Nebraska | Fully exempt | Military pay exempt |
| Nevada | No income tax | — |
| New Hampshire | No income tax | No tax on earned income |
| New Jersey | Fully exempt | Active-duty pay exempt |
| New Mexico | Fully exempt | Active-duty military income exempt from New Mexico personal income tax; file the appropriate adjustment form if required |
| New York | Partial/verify | Some exemptions available; verify |
| North Carolina | Partial/verify | Some exemption for stationed-outside-NC; verify |
| North Dakota | Complex/verify | Official sources conflict or depend on resident vs. nonresident status and recent legislative changes; verify directly with ND Tax Commissioner before relying on any exemption |
| Ohio | Fully exempt | Active-duty pay exempt |
| Oklahoma | Fully exempt | Active-duty pay exempt |
| Oregon | Fully exempt | Federal active-duty pay exempt |
| Pennsylvania | Conditional exemption | Active-duty pay may be exempt when serving outside Pennsylvania; duty location and documentation requirements apply — verify with PA DOR |
| Rhode Island | Partial/verify | Exemption available; verify |
| South Carolina | Partial/verify | Some exemption; verify current threshold |
| South Dakota | No income tax | — |
| Tennessee | No income tax | No tax on wages |
| Texas | No income tax | — |
| Utah | Partial/verify | Deductions available; verify |
| Vermont | Partial/verify | Some exemptions; verify |
| Virginia | Complex/verify | Non-domiciled members protected by SCRA; Virginia-domiciled members should verify current exemption rules with Virginia Tax |
| Washington | No income tax | No tax on wages |
| West Virginia | Partial/verify | Exemption available; verify |
| Wisconsin | Partial/verify | Deductions available; verify |
| Wyoming | No income tax | — |
| Washington DC | Verify | DC taxes income; verify military-specific rules |
This table reflects our best understanding of 2026 rules compiled from state tax authority sources and military pay resources. State tax laws change. Verify any state in this table with the relevant state tax authority before making legal residence decisions.
How to change your state of legal residence
Military members can maintain their original home of record or change their state of legal residence. The key concept is domicile — the state you consider your permanent home and intend to return to.
The process generally involves:
- Establishing genuine domicile in the new state — domicile requires both physical presence and intent to make that state your permanent home. Filing paperwork alone does not create domicile.
- Filing DD Form 2058 (State of Legal Residence Certificate) with your finance office — this changes which state's withholding is applied to your pay, but it does not itself change your legal domicile
- Updating your state of legal residence in DEERS
- Updating your withholding elections in myPay to reflect the new state
- Filing a final-year or part-year return with your previous state (if required)
- Establishing meaningful ties to your new domicile state: voter registration, driver's license, vehicle registration, bank accounts, and — where possible — property or family connections
The SCRA protects your right to maintain your original domicile even when stationed far away. You don't have to change your legal residence just because you get PCS orders. Conversely, you can establish a new domicile if you genuinely intend to make a different state your permanent home.
Domicile is not automatic: Changing your DD Form 2058 and withholding elections doesn't change your legal domicile by itself. Domicile requires physical presence and intent to make the new state your permanent home. Some states apply strict scrutiny to domicile claims — consult a tax professional if your situation involves a state with complex domicile rules.
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Compare your take-home pay at two different duty stations — including state income tax differences — to see what a PCS move actually does to your paycheck.
Open Calculator →Spouse considerations: MSRRA and VBTA
The Military Spouses Residency Relief Act (MSRRA), as amended by the Veterans Benefits and Transition Act (VBTA) of 2018, allows a military spouse to elect to use the service member's state of legal residence (domicile) for income tax and voting purposes — regardless of where the couple is actually stationed.
For a dual-income military family where one spouse earns civilian income, this election can eliminate or reduce state income tax on that civilian income at the duty-station state — but only if the spouse makes the election. Key conditions:
- The spouse must be present in the state solely to be with the service member on military orders
- The spouse must make a valid residency election under MSRRA/VBTA rules and meet the applicable state's form and documentation requirements
- The election applies to the duty-station state's tax — but the domicile state may still tax the spouse's income depending on that state's rules
MSRRA/VBTA rules are complex and state-specific in application. Consult a military tax resource or professional before applying these rules to a spouse's civilian income — the interaction with each state's withholding requirements varies.
Common mistakes
Assuming your legal residence is where you're stationed. It's not, unless you've actively established it there. Where you receive mail and where your orders send you are not necessarily your legal residence.
Not updating withholding after a legal residence change. Changing your DD Form 2058 doesn't automatically update your withholding in myPay. You need to do both steps.
Forgetting that you have a choice. Most service members don't realize their legal residence is actually a decision they control. Many default to their home of record from recruitment and never reconsider it, even after moving multiple times.
Changing too quickly. Changing your legal residence has implications beyond taxes: voting, vehicle registration, hunting/fishing licenses, bar admissions, and professional licensing. The tax savings are real, but think about where you genuinely plan to live after service before establishing legal residence somewhere new.
Not verifying what your state actually says. This guide is a starting point. Tax laws change. An exemption that was partial in 2024 may be full in 2026, or vice versa. Before making decisions based on state tax rules, read the actual state guidance or ask a military tax resource like Military OneSource's free tax prep services.
The bottom line
Your state of legal residence is one of the few financial levers you actually control in military life. Over a 20-year career, the difference between a state with a 5–7% income tax rate and a no-income-tax state can amount to tens of thousands of dollars in cumulative state income tax on base pay — depending on your pay grade, the specific state's rate structure, and how many years you're subject to that rate.
That doesn't mean everyone should rush to establish legal residence in a no-income-tax state. Where you plan to retire, where your family has ties, where you own property, where your professional licenses are — all of these matter beyond the tax question. But understanding the financial impact of your legal residence decision is the first step to making it intentionally rather than by default.
For a full picture of your compensation including the tax advantage of your allowances, see the Total Compensation Calculator. For a side-by-side comparison of what different duty stations mean for your paycheck, see Compare Your PCS Move.
Sources: SCRA (50 U.S.C. § 3901 et seq.), Military Spouses Residency Relief Act, individual state department of revenue guidance. This guide is educational, not tax advice. Consult a tax professional for your specific situation.
