Ohio Military Retirement Pay Deduction

The Department of Taxation lets a retiree deduct retirement pay tied to service in the uniformed services, the reserves, or the Ohio National Guard. Uniformed services include the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, and the commissioned corps of the National Oceanic and Atmospheric Administration and the Public Health Service. The deduction is claimed on the Ohio Schedule of Adjustments. The amount has to be in federal adjusted gross income, and it cannot also be used for the Ohio retirement-income credit. If the pension is a federal civilian retirement that merely includes credit for uniformed service, only the share that matches that service time is deductible. The department's example is 10 years in the Army and 20 years at the National Park Service: deduct one third of the taxable federal pension. A surviving spouse or former spouse can deduct survivor benefit plan payments that are in federal adjusted gross income because of the retiree's death. The statute is Revised Code section 5747.01(A)(23), with "uniformed services" defined in section 5747.01(FF). This is a deduction of the retirement pay, not a credit against the tax. VA disability compensation is already excluded from federal income and is not this deduction. Active-duty pay of an Ohio resident stationed outside Ohio is a separate subtraction.