According to the Oregon Department of Revenue website, "Active service military personnel in Oregon are treated as nonresidents if their address in the payroll records of the Defense Finance and Accounting Services (DFAS) is outside Oregon, regardless of where domiciled."
If you are a resident of Oregon stationed outside of Oregon, you may be considered a nonresident if:
- You did not have a permanent home inside of Oregon for yourself or your family during the tax year
- Your permanent address is outside Oregon during the entire tax year
- Less than 31 days were spent in Oregon
To enter a subtraction for the military income, follow these steps in the program:
- State Section
- Oregon Nonresident Return
- Basic Information
- Special Processing Instructions
- Select 'Military Nonresident'
- Military - select "Yes" from drop-down
- Select continue and then go to Income Subject to Tax
- Amount to adjust state wages pulled from federal - (for example if you performed active military service in 2022, and your Defense Finance and Accounting System address was outside Oregon, Oregon will not tax your military pay) - Enter active duty pay amount
- Continue
If you are a resident of Oregon stationed in Oregon, your military pay is taxable to Oregon, Complete Form OR-40.
If you are a nonresident of Oregon stationed inside Oregon, your military pay is not taxable to Oregon. File a Nonresident return, Form OR-40-N.
To enter a subtraction for the military income, follow these steps in the program:
- State Section
- Oregon Nonresident Return
- Subtractions From Income
- Other Subtraction #1
- Select Military Military Pay from the drop-down list
- Enter the amount to deduct in both the federal and state entry lines (unless filing part year Oregon return)
- Continue
If one spouse is a resident of Oregon and the other is not, file a nonresident joint return.
Other Military Pay:
After making the subtractions above, if you still have taxable military income, you can deduct up to $6,000 per active duty military spouse on the Oregon return. This includes active duty pay for residents stationed inside of Oregon.
To enter a subtraction for the military income, follow these steps in the program:
- State Section
- Oregon Nonresident Return
- Subtractions From Income
- Other Subtraction Number as required
- Select Military Pay from the drop-down list
- Enter the amount to deduct in both the federal and state entry lines (unless filing part year Oregon return)
- Continue
National Guard Members and Reservists:
National Guard and Reserve members that are stationed outside of Oregon for 21 days or longer can subtract the military pay earned during their active duty time.
To enter the subtraction into the return, follow these steps in the program:
- State Section
- Oregon Resident Return
- Subtractions From Income
- Other Subtraction #1
- Select Military Pay from the drop-down list
- Enter Other Subtractions amount
- Save