Individual Income Tax

Military Retirement Pay

The retired pay received for service on military active duty or the National Guard or Reserves, as well as pay received by a surviving spouse through the Survivor Benefit Plan (SBD), is exempt from Ohio income taxes. Beginning in taxable year 2013, taxpayers who receive retirement income related to uniformed services in the Commissioned Corps of the National Oceanic and Atmospheric Administration (NOAA) and the Commissioned Corps of the Public Health Service (PHS) are allowed a deduction for the entire amount of such pay to the extent it is included in federal adjusted gross income. This deduction can be taken on Schedule A, of the Ohio IT 1040. These provisions are explained below:

Retirement and Survivor Benefit Income

Military retired pay and Survivor Benefit Plan benefits are exempt from state income tax and school district income tax for taxable years beginning after Dec. 31, 2007. If  you are a military retiree from the uniformed services or active or reserve components of the U.S. Army, Navy, Air Force, Marines, or Coast Guard, or the National Guard, and are residing in Ohio, or if you are a surviving spouse of a military retiree who now receives income through the Survivor Benefit Plan, you are eligible for this exemption. This pay can be deducted from federal adjusted gross income when an income tax return is filed. Eligible taxpayers can also contact the Defense Finance and Accounting Service (at www.dfas.mil or (800) 321-1080) to request an adjustment of their Ohio withholding.

Federal civil service retirees who received credit for their military service can deduct only that portion of their pension that is based on credit for military service. How to claim this deduction, as well as a formula to assist federal civil service retirees with calculating it, is explained in the instructions for Line 39b on page 24 of the 2013 Ohio income tax instructions.

This paragraph addresses taxable year 2007 and prior years. The military retirement exemption is not available for taxable year 2007 and prior years. Military retirement income for these years is subject to Ohio individual income tax, but is eligible for a credit of up to $200. Income from a survivor benefit plan is also treated as retirement income and is eligible for the same credit. 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, which is the same base as the state income tax. The retirement income credit does not apply to the school district income tax.

 

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.