Arkansas Income Tax on Military Pay and Military Spouses

Arkansas Code section 26-51-306 splits military pay into two groups. Active duty. Subsection (a)(1)(D): "the service pay or allowance received by an active duty member of the armed forces is exempt". Subsection (c)(1) defines an active duty member to include "full-time training duty, annual training duty, and attendance while in the active military service at a school designated as a service school". So a Guard member's annual training, a reservist's mobilisation and a regular member's whole salary are all exempt. The Department of Finance and Administration's instructions describe the exemption as reaching Guard and reserve units, which is right for their active duty and not for drill. Drill and other pay. Subsection (a)(1)(C): any member of the armed services of Arkansas or the United States pays no tax on "the first nine thousand dollars ($9,000) of service pay or allowance". Inactive duty pay above $9,000 is taxable. The Army benefits library, re-read 2026-10-24, still says military pay of the reserve components is exempt without mentioning the cap. Who is not covered. Subsection (c)(2)(B) excludes from "armed forces" a military technician (dual status) under 10 U.S.C. 10216, so technician wages are ordinary civilian wages, and it excludes the NOAA and Public Health Service corps from the full active duty exemption, although they keep the $9,000 exclusion as "armed services". The federal combat zone exclusion in 26 U.S.C. 112 is adopted. Nonresident members and spouses. A member stationed in Arkansas whose home of record is elsewhere owes no Arkansas tax on military pay. A spouse whose domicile is the same as the member's may claim the federal Military Spouses Residency Relief Act by checking the Military Spouse box and attaching Form AR-MS and the member's W-2 or LES. The department asks nonresident members to file Form AR-NRMILITARY when first stationed here to avoid non-filer letters. Deferral. Under the federal Servicemembers Civil Relief Act, as the department's instructions set out, collection of Arkansas income tax can be deferred up to 180 days after release from service where military service materially affects the ability to pay.