Is my military income taxable to Hawaii?

According to the Hawaii filing instructions, if you are a resident of Hawaii your  income is taxable on the Hawaii resident return. 

If you are a nonresident of Hawaii stationed in Hawaii, you are not subject to Hawaii income tax on your active duty military pay. File a resident return with your home state of record. If you have Hawaii sourced income, you may need to file a Hawaii Nonresident return.

If one spouse is a resident of Hawaii and the other is not, file a resident return if you are filing as jointly. If you file a joint return, all of your income (both spouses) will be taxed as if you are residents. 

If you prefer, you can file married filing separate returns and each file using your Hawaii residency. To file separately within the program, you can file the federal return and wait for the return to be accepted. Then, change the filing status for the primary taxpayer and file a separate return for the first spouse. The second spouse will need to create a new account and file a separate return in that account. 

Military Reserve or Hawaii National Guard Duty Pay Exclusion: Hawaii does not tax the first $7,345 received by each member of the reserve components of the Army, Navy, Air Force, Marine Corps, Coast Guard of the United States of America, and the Hawaii National Guard, as compensation for performance of duty as such. If you qualify, enter the smaller of:

• $7,345

OR

• Your pay, as shown on Box 16 of the Form W-2 sent to you by your reserve component.

To enter the military reserve or Hawaii National Guard exclusion within the program, follow the steps below:

1. State Section
2. Subtractions from Federal AGI
3. Military Reserve or HI National Guard - enter the qualified amount
4. Save until you Exit Hawaii Return

Pensions: Hawaii does not tax qualifying distributions from an employer-funded pension plan. This includes qualifying distributions from an employer-funded profit sharing, defined contribution, or defined benefit plan, or from a government retirement system (e.g., federal civil service, military pension, state or county retirement system).

To enter the pension exclusion within the program, follow the steps below:

1. State Section
2. Subtractions from Federal AGI
3. Annual Pension Exclusion - enter amount
4. Save until you Exit Hawaii Return

Additional Information

• Hawaii- Military Spouse Residency Relief Act
• Hawaii Resident, Form N-11 Income Tax Instructions
• Hawaii Non-Resident, Form N-15 Income Tax Instructions