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Indiana Income Tax Exemption for Military Pay

An Indiana resident pays no Indiana income tax on active duty pay from 2024, on reserve and National Guard pay including state active duty from 2023, or on Public Health Service and NOAA corps pay. A nonresident military spouse working in Indiana owes nothing on that pay.

Also called: IC 6-3-1-34, IC 6-3-1-3.5(a)(18), qualified military income, Information Bulletin 27, Schedule IN-2058SP, military spouse, Military Spouse Residency Relief Act, drill pay.

For: Veteran or service member, spouse.

Where it applies

Written for the jurisdictions listed here.

Indiana subtracts "qualified military income" from adjusted gross income under IC 6-3-1-3.5, subsection (a), subdivision (18), to the extent federal law has not already excluded it. What counts. IC 6-3-1-34 defines it as wages paid to a reserve component or National Guard member for that service; "one hundred percent (100%) of wages" paid to an active component member for taxable years beginning in 2024 and after; and wages paid to members of the Public Health Service and NOAA commissioned corps. The Department of Revenue's Information Bulletin 27 of June 2025 says that for 2023 and later a reservist or Guard member deducts wages "including National Guard state active duty, regardless of mobilization, deployment, or federalization", and that this includes a dual status military technician's wages. Civilian wages, contractor income and pay not for the military service are still taxed. Military spouses. Under the federal Military Spouse Residency Relief Act, 50 U.S.C. 4001, the earned income of a spouse who is domiciled in another state and is in Indiana only to live with a service member here on orders is not taxed by Indiana. The spouse files Form IT-40PNR with Schedule IN-2058SP and the service member's W-2. Deadlines. Information Bulletin 27 also covers filing extensions for those serving outside the United States and in combat zones. No double counting. IC 6-3-2-4(b) prevents taking the separate $5,000 military service deduction on the same pay.

Thresholds

No rating or income gate is recorded. Read the detail and the official source.

Sources

Legislation

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House Enrolled Act 1280 (P.L.58-2025) Extended the military pay exemption and the military retirement deduction to the Space Force and the Public Health Service and NOAA commissioned corps

Catalog reconciledEnactedScope changed

Signed Takes effect

  1. Introduced Done, , step 1 of 6
  2. In committee Done, , step 2 of 6
  3. Passed one chamber Done, , step 3 of 6
  4. Passed both chambers Done, , step 4 of 6
  5. Signed by the governor Done, , step 5 of 6
  6. In effect Done, , step 6 of 6

Expands benefits Extends the military pay exemption and the military retirement deduction to the Space Force and the Public Health Service and NOAA commissioned corps.

Amended IC 6-3-1-34 so qualified military income includes pay of the Space Force and of the Public Health Service and NOAA commissioned corps, and IC 6-3-2-4 so the retirement and survivor benefits deduction covers those services, effective January 1, 2025 retroactively. Approved April 10, 2025. The Department of Revenue updated Information Bulletins 6 and 27 in June 2025.

Sponsor

  • Mitch GoreHouse

And 6 co-sponsors

Touches IC 6-3-1-34 · IC 6-3-2-4

Also touches

Official record

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Disclaimer

VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.