According to this Indiana Department of Revenue information bulletin, beginning in 2018, an individual, or an individual’s surviving spouse, is allowed an additional deduction of up to $6,250 for retirement pay or survivor’s benefits received as a result of the individual’s active or reserve service in the armed forces. In 2019 there was an increase of 25% of the benefits exceeding the $6,250, in 2020 there was an increase to 50%, in 2021 an increase up to 75% and in 2022 it will then reach the maximum of 100%.
If the income on line 1 of Form IT-40 includes military retirement income and/or survivor’s benefits, you (and/or your spouse, if married filing jointly and both qualify) may be eligible to take the Military Retirement Income and/or Survivor’s Benefits Deduction. For 2022 and later, the deduction is equal to the entire amount of military retirement income and/or survivor’s benefits.
This subtraction is not automatically calculated. You will have to manually enter the deduction amount within your Indiana return.
To make this manual entry, please go to:
- Edit (three dots)
- Subtractions from Income
- Military Retirement and/or Survivors' Benefits Deduction