FAQs — Individual Income Tax - Military

Can all honorably discharged veterans shop sales and use tax free online from a military exchange?

Currently, honorably discharged veterans with a 100 percent service related disability, Medal of Honor recipients, and military retirees have full exchange privileges as recognition of the service made by those individuals. Effective November 11, 2017, all honorably discharged veterans of the Military Services will receive limited exchange privileges and be able to shop sales and use tax free online from a military exchange (no uniform items, alcohol, or tobacco products).

Pursuant to federal statute, no sales or use tax may be levied with respect to the sale, storage, or use of tangible personal property sold by the United States or any instrumentality of the United States to any authorized purchaser.  A person is deemed to be an authorized purchaser only with respect to purchases which they are permitted to make from commissaries or exchanges under regulations created by the Secretary of Defense. 

Currently, the Department of Defense (DOD) Instruction Number 1330.21 – Armed Services Exchange Regulations includes an enclosure that outlines the “authorized patrons” and details each classification of individuals’ exchange privileges (Enclosure 6).  Additionally, DOD Directive-type Memorandum (DTM) 17-003 – Veterans Military Exchange Online Shopping Access Policy extended limited online military exchange shopping privileges to all honorably discharged veterans of the Military Services effective November 11, 2017. One of the requirements listed in the DTM was to incorporate this policy into DOD Instruction 1330.21. So, once the DOD Instruction 1330.21 is updated to identify this classification of individuals as an authorized purchaser or as long as the DTM remains effective, the Ohio Department of Taxation will not attempt to subject these sales to sales or use tax.