Oklahoma Income Tax on Military Pay, Prisoners of War and Service Members Killed in Action

Oklahoma does not tax the pay of its residents who serve. Military pay. Title 68, section 2358, subsection E, paragraph 5, subparagraph b: since July 1, 2010, "one hundred percent (100%) of the income received by any person from the United States as salary or compensation in any form, other than retirement benefits, as a member of any component of the Armed Forces of the United States shall be deducted from taxable income". That reaches active duty pay, reserve and Guard drill pay and federal orders. It is limited to pay "from the United States", so pay for state active duty ordered by the Governor, which the state pays, is not covered by the words. The Tax Commission may extend the filing deadline for a service member when filing is impractical. Prisoners of war and missing in action. Before July 1, 2010 paragraph 6 deducted all federal pay during captivity or missing status; since then the general 100 percent deduction covers it. Killed in action. Title 68, section 2358.1A makes "any payment made by the United States Department of Defense as a result of the death of a member of the Armed Forces of the United States who has been killed in action in a United States Department of Defense designated combat zone" exempt in the year the member is declared dead, and exempts "any income earned by the spouse" in the same year. The Tax Commission must refund tax already paid, and the ordinary time limit on refunds does not apply.