Is My Military Income Taxable to New York?

Whether your military pay is taxable to New York depends on your residency status for New York tax purposes.

If You Are a New York Resident

If your permanent home (domicile) was in New York when you entered the military and you remain a New York resident, your military pay is generally taxable by New York to the same extent it is taxable federally.

Being stationed outside New York does not automatically change your New York residency status.

Exception for Certain New York Residents (Group A or Group B)

Even if your domicile was originally in New York, you may qualify as a nonresident for New York tax purposes if you meet the requirements of either Group A or Group B under New York residency rules.

If you qualify as a nonresident under one of these exceptions, your military pay is generally not subject to New York income tax.

Group A

You must meet all of the following:

• You did not maintain a permanent place of abode in New York during the tax year.
• You maintained a permanent place of abode outside New York for the entire tax year.
• You spent 30 days or less in New York during the tax year.

Group B

You must meet all of the following:

• You were present in a foreign country for at least 450 days during any period of 548 consecutive days.
• You, your spouse (unless legally separated), and minor children spent 90 days or less in New York during that 548-day period.
• During the nonresident portions of the tax years in which the 548-day period begins and ends, your New York presence does not exceed the allowable prorated day limitation.

If you satisfy either Group A or Group B, you may be treated as a nonresident even though your domicile remains in New York.

If Your Home State Was Not New York When You Entered the Military

If your permanent home was not located in New York when you entered military service, you generally remain a nonresident even if you are stationed in New York.

Military pay earned while assigned to New York is generally not subject to New York income tax solely because of your military assignment.

Important Note for Nonresidents

Even if your military pay is not taxable to New York, you may still have a New York filing requirement if you receive other New York-source income, such as:

• Wages from nonmilitary employment performed in New York
• Business income from New York sources
• Rental income from New York property
• Income earned by a spouse that is taxable to New York

Where Do I Enter the Military Nonresident Subtraction?

If you qualify for the military pay subtraction, enter it in the New York return using the following steps:

1. State Section
2. Edit New York Nonresident Return
3. Subtractions from Income
4. Other Subtractions
5. Other Subtractions (2nd Page)
6. Type of Other Subtraction → Select from the dropdown menu
7. Other Subtractions Description → Select Military Nonresident Pay
8. Enter the subtraction amount in both boxes on the page
9. Select Continue to save

Entering the amount in both fields is necessary for the program to calculate the subtraction correctly.

Where Do I Enter Military Retirement Income?

Military retirement pay received by retired servicemembers and qualifying beneficiaries is not taxable on the New York return.

To enter the pension exclusion:

1. State Section
2. Edit New York Resident Return
3. Subtractions from Income
4. Certain Pension Income Is Excluded from New York Taxable Income
5. Enter the taxable military pension amount included on the federal return
6. Select Continue to save

The program will use this information to calculate the appropriate New York subtraction for the military pension.

Military Spouse Residency Elections

Under the Servicemembers Civil Relief Act (SCRA), military servicemembers and their spouses may elect to use one of the following for state income tax purposes:

• The servicemember's state of legal residence or domicile
• The spouse's state of legal residence or domicile
• The state where the servicemember's permanent duty station is located

These elections can affect residency status, filing requirements, and whether military or spousal income is taxable to New York. Military families should review these options carefully when preparing their returns.