Is my military income taxable to Virginia?

According to the Virginia website, all of your income is reported on your Virginia return regardless of where it was earned or the source.

If you are a resident of Virginia, you may be able to subtract up to $15,000 of military pay. You must be on extended active duty for more than 90 days. If your total military income is more than $30,000, you do not qualify for the deduction. For every $1 over $15,000, the deduction is reduced by $1.

To claim a subtraction for the active duty pay (if qualified), follow these steps in the program:

State Section
Virginia Resident Return
Subtractions From Income
Other Subtractions
Add Other Subtractions
Select Basic Military Pay from the drop-down menu
Enter the Subtraction Amount, Enter only the amount that you are allowed to subtract.

If you are a nonresident of Virginia stationed in Virginia, your active duty military pay is not taxable to the state.

Your W-2 should not have Virginia listed in Box 15. If the income is not allocated to Virginia it is not included on the state return.

If one spouse is a resident of Virginia and the other is not, you would file Married Filing Separate state returns. After filing the federal return, change the filing status on the state return to Married Filing Separate. The other spouse will need to create a separate account in the program to file the Virginia return (if needed).

If claiming a dependent, at least half of the total federal adjusted gross income must be reported on the return. If claiming itemized deductions, the spouse must be able to support the claim (show proof).

Combat Pay Deduction:

Military pay and allowances earned while stationed in a combat zone are not taxable on your return.

Combat pay reported as "Code Q" wages on Form W-2 is excluded from federal adjusted gross income and may not be subtracted on the Virginia return.

To exclude the combat pay from the state return (that was not already excluded on the federal return), follow these steps in the program:

State Section
Virginia State Return
Subtractions from Income
Other Subtractions
Add Other Subtractions
Select Military Pay Attributable to Active Duty in Combat Zone from the drop-down menu
Enter the Subtraction Amount
Continue

Exemption for Virginia National Guard Income:

National Guard income for persons rank 03 and below may be subtracted from the return. The amount cannot exceed $3,000 or the amount of income received for 39 days, whichever is less. This subtraction does not apply to members of the active or reserve units.

You cannot claim a credit for Low-Income Individuals or Virginia Earned Income Credit if you take this deduction.

To enter the subtraction, follow these steps in the program: