Yes, if you are an Ohio resident. However, a change in law for taxable years beginning on and after January 1, 2007 allows for the deduction of your military pay you receive while you are stationed outside the state (see below).

Division (A)(24) of Ohio Revised Code section 5747.01 provides that for taxable years beginning on and after January 1, 2007 an Ohio resident service member can deduct military pay and allowances received during a taxable year while the service member is stationed outside Ohio to the extent these amounts are included in federal adjusted gross income.

The term “stationed” refers to an Ohio resident service member’s permanent place of military duty. Periods of training in which a service member, either individually or as part of a unit, departs his/her permanent place of duty and then returns, following the completion of the training, is not included in the definition of “stationed.”

Military pay and allowances for service members of all military components who are Ohio residents stationed inside Ohio will continue to be subject to Ohio individual income tax and also to school district income tax if the service member resides in a taxing school district.

Examples of military pay and allowances which do qualify for this deduction include the following: 

• Military pay and allowances received while a member of the Active Component of the U.S. Armed Forces and assigned to a permanent duty station outside Ohio.
• Military pay and allowances received while a member of the National Guard or the Reserve Components of the U.S. Armed Forces in an active duty status, other than training status not described below, outside Ohio.
• Military pay and allowances received while a member of a unit of the National Guard or the Reserve Components of the U.S. Armed Forces under federal mobilization orders in which the unit mobilizes for training at a non-Ohio location followed by an operational deployment to any non-Ohio location.
• Military pay and allowances received by cadets at the U.S. service academies – the Military Academy, the Naval Academy, the Air Force Academy and the Coast Guard Academy. Cadets are serving on active duty under the provisions of 38 United States Code section 101 (21) and are eligible for this deduction for the pay they receive while stationed at these facilities to the extent that this pay is included in federal adjusted gross income (line 1 on the Ohio income tax return). However, this deduction is not available for pay received for service in the Reserve Officer Training Corps.

Note: a servicemember cannot deduct pay for service in a combat zone if that pay is not included in federal adjusted gross income (line 1 on form IT 1040).

Service members eligible for this deduction may request that the military exempt them from Ohio withholding only during the period of their service outside the state by submitting Ohio form IT 4 MIL to their military finance office.

Additional information for tax year 2007: Military personnel stationed outside Ohio and who are claiming to have a home-of-record outside Ohio for tax year 2007 must file by May 30, 2008 Ohio form ITDA-M, Affidavit of Non-Ohio Domicile for Taxable Year 2007 - Military. If Ohio tax was mistakenly withheld, you should submit U.S. Department of Defense form DD 2058 or its equivalent to the applicable military authorities to change your military state of residence. See the Ohio Individual Income Instructions booklet for 2007; specifically, the line 36 instructions on page 19, for more information.

Examples of military pay and allowances which do not qualify for this deduction include the following: 

• Military pay and allowances received while a member of the Active Component of the U.S. Armed Forces who is assigned to a permanent duty station inside Ohio and who departs Ohio for a period of temporary duty for unit or individual training (e.g., training exercises, basic and advanced training courses, and additional skill training courses) and then returns to Ohio.
• Military pay and allowances received while a member of the National Guard or the Reserve Components of the U.S. Armed Forces in an Active Duty for Training status who departs Ohio for a period of temporary duty for unit or individual training (e.g., basic and advanced individual training, unit annual training, training exercises, basic and advanced training courses, and additional skill training courses) and then returns to Ohio.

For taxable years 2006 and prior, the deduction described above is not available.

You are an Ohio resident if Ohio is indicated as your state of legal residence on DD Form 2058, “State of Legal Residence Certificate,” or equivalent (e.g., home of record) in your military personnel record, whether or not you spent any time in Ohio during the taxable year. For purposes of Ohio income taxes, if you are a member of the military and if Ohio is indicated in your military personnel record as your state of legal residence, then you are domiciled in Ohio.

You can calculate a resident tax credit if any of your income was taxed by another state. For information about the resident tax credit, see the instructions for Schedule C in the Ohio Individual Income Instructions booklet.

If you are an Ohio resident service member, you may also be subject to school district income tax. If your legal residence is located within a school district that imposes the tax (see Ohio School Districts - 2007 and Ohio School Districts with an Income Tax - 2007), then you are liable for payment of school district income tax (see the Ohio School District Income Tax Instructions booklet).

Beginning with taxable year 2007, you can deduct military pay received while you are stationed outside Ohio (see beginning of this answer). However, you must still file the Ohio income tax and school district income tax returns.

Military nonresidents:

Who is a military nonresident?

If your state of legal residence (e.g. home of record) in your military personnel record is not Ohio, you are a military nonresident.

Who does not have to file an Ohio income tax return?

If you are a military nonresident stationed in Ohio, you may not have to file an Ohio income tax return. You do not have to file a return if (i) you are a military nonresident, (ii) your filing status on your IRS income tax return is single, married filing separately, qualifying widow(er), or head of household, and (iii) you have no Ohio income other than your military compensation. If the filing status on your IRS income tax return is married filing jointly and if you and your spouse have no Ohio income other than military compensation, you do not need to file an Ohio income tax return.

To avoid a possible tax assessment based on filing address, military nonresidents are encouraged to complete and file an IT 10 form annually, if applicable.

Who is required to file an Ohio income tax return?

You will have to file an Ohio income tax return if any of the following applies to you:

• You earned compensation in Ohio other than as a service member; or
• You had income from other Ohio sources such as (i) rental income from Ohio property,  (ii) capital gains from the sale of Ohio property, (iii) Ohio Lottery Commission prizes and awards, or (iv) income from a pass-through entity doing business in Ohio; or
• Your IRS income tax return status was married filing jointly, and your spouse had nonmilitary income or gain from any Ohio source.

Military nonresident example:

John and Ruth are married and currently live in Fairborn, Ohio. They are residents of the state of New York, and John is on active duty at Wright-Patterson AFB. He also earns wages on a part-time basis at a hardware store in the Dayton area and receives interest income from a savings account at a Dayton bank. Ruth is a school teacher in the Dayton city school system. They file married filing joint federal and Ohio income tax returns. On line 36 of the year 2007 Ohio income tax return, form IT 1040, they may deduct all of John’s active duty military pay. John’s wages from the hardware store and Ruth’s wages from the Dayton school district would be subject to Ohio income taxes. As a nonresident of Ohio, John may claim the nonresident credit on Schedule D of the IT 1040 for his interest income. They may both claim the nonresident credit on Schedule D and on line 13 of the year 2007 Ohio individual income tax return.

For additional information:

Visit a section of our Web site dedicated to military tax questions at Military Tax Provisions.

No. None of your income is taxable. Deduct your own income on line 2 of the Ohio income tax return, form IT-1040.  By so deducting, your income will not be subject to any Ohio school district income tax.  If your spouse is also not domiciled in Ohio (e.g., your spouse is domiciled in New York or in another state), none of your spouse’s income is taxable for the school district income tax.  However, if your spouse is domiciled in Ohio and resides in a school district levying a school district income tax, then all your spouse's income is subject to the school district tax.   For more information about “domicile,” refer to Question #3 under Q & A's Regarding Military Servicemembers' Residency in the Military Tax Provisions section of the department's Web site.  
 

Note: all income, other than military compensation, earned in Ohio by a nondomiciled servicemember is subject to Ohio individual income tax (even though such income is not subject to any school district income tax).  If the nondomiciled servicemember is married and if the nondomiciled servicemember’s spouse is domiciled outside Ohio, then the spouse’s income, other than military compensation, earned in Ohio is subject to Ohio individual income tax.  Examples of income earned in Ohio include (i) compensation paid by the U.S. Department of Defense to a civilian employed in Ohio, (ii) compensation paid by a nonmilitary employer to an individual (whether or not a servicemember) employed in Ohio, (iii) profit from rental activities in Ohio, and (iv) prizes and awards received from the Ohio Lottery Commission.

To avoid a possible tax assessment based on filing address, military nonresidents are encouraged to complete and file an IT 10 form annually, if applicable.
 

For more information on the military and Ohio individual income tax, see FAQ #1, above.  

For taxable year 2007 and prior years, Ohio residents must pay Ohio income tax on their military retirement income. However, these taxpayers are eligible for a retirement income credit of up to $200, based on the amount of retirement income received during the taxable year (claim the credit on line 49 of Ohio Tax Department form IT-1040). Income which a spouse receives from a military survivor benefit plan is also treated as retirement income and is also eligible for the credit of up to $200.

Military retirement income and survivor benefit plan income is also  subject to school district income tax if the taxpayer resides in a school district that levies the “traditional method” income tax. Military retirement  income and survivor benefit plan income is not subject to school district income tax if the taxpayer resides is a school district levying the “alternative method” income tax, which is based on earned income only (to determine what school district you reside in and if your are subject to school district income tax, see Ohio School Districts - 2007 and Ohio School Districts with an Income Tax - 2007; if you are liable for payment of school district income tax see the Ohio School District Income Tax Instructions booklet). 

The retirement income credit does not apply to the school district income tax.

Effective for taxable years beginning after Dec. 31, 2007, military retired pay of taxpayers who retired from service in the active or reserve components of the U.S. Army, Navy, Air Force, Marine Corps, Coast Guard, or from the National Guard, and SBP benefits, are exempt from state income tax and school district income tax. This pay can be deducted from federal adjusted gross income.

Eligible taxpayers can request that their Ohio withholding be adjusted by contacting the Defense Finance and Accounting Service at www.dfas.mil or (877) 363-3677. Federal civil service retirees who received federal service credit for military service are allowed to deduct only that portion of their pension attributable to military service.

Note: Since military retirement income is deducted from federal adjusted gross income and thus is not included in Ohio adjusted gross income for post-2007 years, military retirement income does not qualify for the retirement income credit.

Yes. Cadets at the U.S. service academies – the Military Academy, the Naval Academy, the Air Force Academy and the Coast Guard Academy – are considered to be serving on active duty under the provisions of 38 United States Code section 101 (21). All of the academies are located outside Ohio, and cadets are eligible for the deduction from federal adjusted gross income for pay received while stationed at these facilities. (Note: this provision does not extend to service in the Reserve Officer Training Corps.) See division (A)(24) of Ohio Revised Code section 5747.01.

No. Child support receipts are not taxable income, regardless of source. Since these amounts are not taxable, they are not eligible for the deduction.

Yes. Any portion of military retirement pay which an ex-spouse directly receives from a retirement fund and which is part of a divorce settlement for spousal support is eligible for the deduction for military retired pay to the extent this pay (i) is included in the recipient’s federal adjusted gross income and  (ii) would qualify for the deduction allowable by division (A)(26) of Ohio Revised Code section 5747.01 if the retired military person had received the income. Please note that the Ohio Department of Taxation may require a copy of the divorce agreement and the 1099-R as verification for the deduction.