Military Spouses and State Taxes
Military and Spouse - State taxes
Active duty service members have always been able to keep one state as their state of legal residency (usually their Home of Record) for tax purposes even when they move frequently on military orders. A state of legal residence (SLR) is also considered their “domicile” or “resident” state. For more information, see Filing State Income Taxes When You're in the Military.
This was not so for the nonmilitary spouse until the Military Spouse Residency Relief Act (MSRRA) was signed in 2009. Since then, a nonmilitary spouse of a service member may be able to keep the same resident state of the military spouse regardless of which state they live in.
For more information on how a particular state handles MSRRA, check out Military Filing Information on State Websites.
How a nonmilitary spouse claims a resident state
A nonmilitary spouse cannot just choose the service member’s state or “inherit” or “adopt” that state upon marriage.
At a minimum, the spouse must have lived in that service member’s resident state before “claiming” it as their own resident state for MSRRA qualifications. The spouse must also be able to prove residency by being registered to vote, maintaining a driver’s license, and any other residency requirements of that state.
Qualifying for the MSRR Act
When the military family no longer lives in that resident state, to qualify under the MSRR Act, the following conditions must be met:
- Both the servicemember and spouse have the same resident state.
- The service member in stationed, in compliance with military orders, in a state that is not his resident state
- The nonmilitary spouse is in that state solely to live with the service member
When the nonmilitary spouse meets the above qualifications, their wages from services performed in that new state will only be taxed in their resident state, not by the state they are currently living in.
The spouse will need to check the their state to see how to request that income taxes are not withheld from their paycheck for that state. See Military Filing Information on State Websites and the example below.
When the MSRRA is no longer applicable
The MSRRA is no longer applicable if:
- Service member leaves the service.
- Couple divorces.
- Spouse clearly establishes the new state as a state of residence. This includes an action like applying to vote in that state.