Military Tax Tips

Members of the Military

We provide extensions and other tax benefits to members of the Armed Forces serving in areas designated as combat zones. For more information, see Tax Bulletin 05-5. 

Members of the military can use MilTax, an approved tax preparation software, for free tax preparation and filing services. 

If you decide to file a paper return, our Tax Table Calculator and our Spouse Tax Adjustment Calculator may help. 

Filing Requirements

Filing requirements for members of the Armed Forces are generally based on income and residency status. For additional information, see Who Must File and Residency.

Residency Status

Under the Servicemember Civil Relief Act (SCRA), military servicemembers serving in compliance with military orders and their spouses may use any of the following for their resident status:

• the residence or domicile of the service member
• the residence or domicile of the spouse, or
• the servicemember’s permanent duty station.

Servicemembers and spouses are not required to choose the same residence.

Nonresident Military Personnel

If you choose a state other than Virginia under the SCRA, you are considered a nonresident. In this instance, your active duty pay is SCRA-protected from Virginia individual income tax and is considered exempt.

• Virginia income that is not active duty pay, such as income from a part-time job, self-employment income, or rental income from property, is not SCRA-protected and is generally taxable.
• If you choose a state other than Virginia as your residency but have Virginia income which is not SCRA-protected, you must file Form 763 to pay individual income tax on it.

If your state of residence has an income tax, please check with that state regarding possible filing requirements.

Nonresident Military Spouses

If you choose a state other than Virginia under the SCRA, you are considered a nonresident. In this instance, your income from Virginia for services performed (such as wages) is SCRA-protected and is considered exempt from Virginia individual income tax.

• Virginia income that is not from services performed, such as rental income from property, is generally taxable.
• Income from self-employment may or may not be SCRA-protected and will depend upon the type of business and how the income is derived.
• If you choose a state other than Virginia as your residency but have Virginia income which is not SCRA-protected, you must file Form 763 to pay individual income tax on it.

When notifying your employer of personal exemptions on Form VA-4, SCRA-protected income can be indicated by checking the line for the Servicemember Civil Relief Act.

Nonresident filers whose only income from Virginia is SCRA-protected are not required to file a Virginia return and pay Virginia individual income tax. If you had Virginia tax withheld, you may file Form 763-S to request a refund.

If your state of residence has an income tax, please check with that state regarding possible filing requirements.

Resident Military Personnel and Spouses

If you cannot choose a state other than Virginia under the SCRA, or if you choose to use Virginia, use Form 760, Resident Income Tax Return. Your SCRA-protected income is not exempt.

Part-Year Resident Military Personnel

If you choose a state other than Virginia as your residency and have a break in military service, you may be required to file Form 760PY, Part-Year Resident Income Tax Return. For more information, please see the Instructions for Form 760PY.

Filing Separate Returns

If you are a resident and your spouse is a nonresident (or vice versa), you and your spouse must file separate returns. Income, dependent exemptions, and itemized deductions must be allocated under federal rules for separate filing, as if you had filed separate federal returns. As a general rule, the spouse claiming an exemption for a dependent must be reporting at least half of the total federal adjusted gross income. In addition, the spouse must be able to support their claim of itemized deductions. If it is not possible to account for the deductions separately, the deductions may be allocated based on each spouse's share of the federal adjusted gross income. When filing a separate return, the other spouse's income, exemptions, and deductions should not be included.

For additional information on residency, please visit our Military Servicemembers and Spouses Residency: FAQ.

Deduction for Military Basic Pay

Military personnel stationed inside or outside Virginia may be eligible to subtract up to $15,000 of military basic pay received during the taxable year, provided they are on extended active duty for more than 90 days. For every $1.00 of income over $15,000, the maximum subtraction is reduced by $1.00. For example, if your basic pay is $16,000, you are entitled to deduct only $14,000. You are not eligible for the subtraction if your military basic pay is $30,000 or more.

Exemption for Virginia National Guard Income

The wages or salaries received by any person for active and inactive service in the National Guard of the Commonwealth of Virginia, not to exceed the amount of income derived from thirty-nine calendar days of such service or $5,500, whichever amount is less. However, only those persons in the ranks of O6 and below shall be entitled to the deductions specified herein.

If a National Guard service member has been in an active duty status for 90 consecutive days or more during the taxable year, they may also qualify for the exemption for the first $15,000 of basic military pay. However, if a National Guard service member has been on active duty status for less than 90 consecutive days of the taxable year, they will not qualify for the exemption for the first $15,000 of basic military pay. If their extended active duty status rolls into the following taxable year and lasts for more than 90 consecutive days, they will qualify for the exemption on the following year income tax return, but only for the pay earned in that taxable period.

Subtractions

Combat and Hazardous Duty Pay Subtraction

Military personnel on active duty service in a combat zone or a qualified hazardous duty area may subtract their combat or hazardous duty pay, to the extent that the pay was included in federal adjusted gross income and not otherwise subtracted, deducted or exempted. Any military pay allowances earned while serving by order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area treated as a combat zone for federal tax purposes pursuant to Section 112 of the Internal Revenue Code qualify for the subtraction. Note: Combat pay reported as "Code Q" wages on Form W-2 is excluded from federal adjusted gross income and may not be subtracted on the Virginia return.

Military Retirement and Benefits Subtraction

For Tax Year 2024, you can claim a subtraction of up to $30,000 for military retirement income received for service and benefits paid to the surviving spouse of a veteran, including under the Survivor Benefit Plan program established by the U.S. Department of Defense. For more information, please see our Military Benefits Subtraction FAQ.

Claiming More Than One Subtraction

It is possible to meet qualifications for and claim more than one military subtraction; however, a double exclusion of military income is prohibited for military subtractions. For example, the income used to calculate the $15,000 Military Subtraction could not be used to calculate the National Guard Subtraction and vice versa. Similarly, if you claim a subtraction for military retirement or benefits, you cannot claim another subtraction, deduction, credit, or exemption for the same income.

Filing and Payment Extensions

If you are stationed outside the United States or Puerto Rico on the date your return is due (May 1), the due date for filing and payment of your Virginia income tax is automatically extended to July 1. When filing under this provision, be sure to write "Overseas Rule" at the top of your return, and attach a statement explaining that you were out of the country. For general information on extensions, see When to File. You may also wish to review the extension information for personnel serving in combat zones.

Extensions for Noncombat Assignments Outside the US

Under current Virginia law, members of the Armed Forces serving in a combat zone receive either the same individual income tax filing and payment extensions as those granted to them by the IRS, plus an additional fifteen days, or a one-year extension, whichever date is later. All extensions apply to spouses of military personnel also. Service members who claim this extension write "Combat Zone" at the top of their tax returns and on the envelopes used to file the returns, as well as on any notice issued by the Virginia Department of Taxation regarding tax collection or examination.

Every member of the armed services deployed to noncombat service outside of the United States is also allowed an extension of his or her due date for filing and payment. The extension will expire 90 days after the completion of deployment. Service members who claim this extension should write "Overseas Noncombat" at the top of their tax returns and on the filing envelopes.