Military retirement pay received by an Indiana resident is taxable in the same manner that it is for federal tax purposes.
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%.
This subtraction is not automatically calculated. You will have to manually enter a deduction up to $6,250 within your Indiana return.
Where to enter deduction?
To make this manual entry, please go to:
- State Section
- Edit Indiana Return
- Subtractions from Income
- Military Retirement and/or Survivors' Benefits Deduction