Ohio Veterans Bonus
Ohio resident veterans who served during the time of the
first Persian Gulf War or during the conflicts in Afghanistan
and Iraq are eligible to receive a bonus approved by Ohio
voters in November 2009 and administered by the Ohio
Department of Veterans Services. The bonus is not taxable at
either the federal or state level, as explained below:
Taxability of Ohio Veterans Bonus
The Ohio Veterans Bonus is not taxable as part of either
federal or Ohio adjusted gross income. Bonus recipients also
do not need to report it as income on either their federal or
Ohio income tax return.
Normally, income tax would apply to any military pay that is
earned for service outside a combat zone. But the Internal
Revenue Service determined that the bonuses are not
considered to be military pay; they are instead regarded as
gifts and are thus excluded from federal adjusted gross
income. The ruling is explained in a Sept. 1, 2010 letter to the Ohio Attorney General .
The state had already taken action to exempt the bonus from
Ohio income tax. The exemption was a provision of House Bill
48, enacted by the General Assembly in March 2010 and signed
into law by the Governor on April 2, 2010. However, the
ruling by the IRS means that the bonus is exempt from both
federal and state income tax. The bonus is also not taxable
income for purposes of school district income tax.
The Ohio Veterans Bonus applies to any Ohio resident veteran
of an armed military service who served on active duty for
purposes other than training between Aug. 2, 1990 and March
3, 1991 or at any time since Oct. 7, 2001. Eligible veterans
will receive $100 for each month spent on active duty service
in the Persian Gulf, Afghanistan or Iraq during these times,
up to a maximum of $1,000. Veterans who served in other areas
are eligible for $50 for each month of active duty service,
up to a maximum of $500. Family members of service members
who lost their lives in these conflicts are eligible for a
benefit of $5,000 plus the benefit the deceased veteran would
have received up to a maximum of $1,500. Families of missing
or prisoner of war service members may be eligible for a
bonus of $5,000. Complete details, and how to apply, are at
http://www.veteransbonus.ohio.gov.
Have questions?
Additional details concerning military tax issues are
discussed in our Frequently Asked
Questions - Military.
You can reach us by e-mail at Military-Info@tax.state.oh.us.
Our toll-free number for individual taxpayer inquiries is
(800) 282-1780, and the toll-free number for forms is (800)
282-1782.