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Military Spouses and State Taxes

Updated: 2/05/2013
Article ID: GEN12759

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When the MSRRA is no longer applicable

The MSRRA is no longer applicable if: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.

Example: Joe and Mary and which state to file

Joe lived in Georgia all of his life until he’s 18 and joins the Army in Atlanta. No matter where he is stationed, every year he files a Georgia resident return and pays Georgia tax.
A few years ago, when stationed in Virginia, he meets Mary, a teacher in Pennsylvania. They get married and Mary moves to Arlington, Virginia to live with Joe. She takes a job as a teacher. Since she has never lived in Georgia, under the MSRRA, she can’t claim Georgia as her resident state. She is considered a Virginia resident, having lived there for more than 183 days and will pay tax on her earned income (and other income) to Virginia.   
Joe receives permanent change of station back to Georgia and they both move to Augusta. Again, Mary has a teaching job.  Since she lives there all year, she’s considered a Georgia resident. She and Joe will file a joint return and pay Georgia tax on all of their incomes.
A couple of years later, Joe is stationed again in Virginia. They both move back to Arlington and Mary is again teaching. Mary has decided to keep Georgia as her resident state. Now under MSRRA, Mary will NOT pay tax on her earnings in Virginia. She and Joe will file a Georgia resident return and pay Georgia tax on all of their income. 
Note for Mary: She needs to check the Virginia state website to see how to request that Virginia income tax not be withheld from her wages.  Since she will be paying Georgia taxes on her wages, she does need to have Georgia income tax withheld from her paycheck. 
 Note for Joe:  If Joe works a nonmilitary job in Virginia, he may have to file pay tax in Virginia. See Filing State Taxes When You're in the Military  and  Civilian Pay Earned by Active Duty Military  for more details. 
 
 

For more information

For more information, see below. You can also contact your local military legal office.

Filing State Income Taxes When You're in the Military

Military Spouse Residency Relief Act

Military Filing Information on State Tax Websites

Civilian Pay Earned by Active Duty Military

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