Why Your Home State Matters for Military Spouse State Taxes
Normally, a state taxes the wages you earn while working there. Military families move often, so federal law gives spouses special flexibility to choose where their income is taxed rather than automatically defaulting to the state where they work.
What Domicile Means
IRS Publication 3 defines domicile as “the permanent legal home you intend to use for an indefinite or unlimited period, and to which, when absent, you intend to return.” It isn’t always where you live right now. Your domicile decides which state treats you as a resident for tax purposes.
The Laws That Protect Military Spouses
The Military Spouses Residency Relief Act of 2009 (MSRRA) originally amended the Servicemembers Civil Relief Act (SCRA) to protect civilian spouses. Under that 2009 rule, a spouse could only keep their home state if their legal domicile already matched their service member’s prior to relocating.
Congress broadened these protections in stages:
- In 2018, the Veterans Benefits and Transition Act allowed spouses to elect the service member’s state of legal residence for tax purposes, even if the spouse had never physically lived there.
- In 2023, the Veterans Auto and Education Improvement Act of 2022 (50 U.S.C. § 4001) expanded these rights even further.
Under current federal law, either spouse in a military marriage can elect to use any of the following for state tax purposes, regardless of when they were married:
- The service member’s legal residence or domicile
- The spouse’s legal residence or domicile
- The service member’s permanent duty station
When the Duty State Can’t Tax Your Wages
As a military spouse, your wages are protected from duty-station state taxes if:
- Your service member is in the state under military orders.
- You’re living in that state solely to be with the service member.
- You haven’t chosen the duty state as your tax residence.
Which State Taxes Your Wages
| Your situation | Which state can tax your wages |
|---|---|
| You live in the duty state on military orders and choose your service member’s domicile | Your service member’s home state, not the duty state |
| You live in the duty state with your service member on orders and choose your own domicile | Your home state, not the duty state |
| You live in the duty state with your service member on orders and choose the duty state | The duty-station state |
| You moved to the duty state for personal/civilian reasons, not to accompany your service member | The duty state, under standard civilian residency rules |
How to Stop Duty-State Withholding
Withholding is the tax your employer takes out of each paycheck and sends to the government ahead of time. If you qualify, give your employer proof of your military spouse status along with the duty state’s exemption form. Each state has its own form, so check with the duty state’s tax agency.
Other Things That Can Affect Your State Taxes
Income That Isn’t Wages
The protection covers money you earn by working. Other income, such as rental income from property in the duty state, can still be taxed there.
Community Property States
Some states use community property laws, which can affect how military pay is split between spouses. Publication 3 lists Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin, and notes that active duty pay is subject to these laws.
Spouses With Different Home States
If you and your service member have different domiciles, your state returns can get more complex. You may need to choose between joint and separate state returns, a decision tied to your filing status. You make the residence election each tax year, so you can choose a different state if your situation changes, such as after a move.
If you’re unsure whether you need a return at all, learn who has to file.
Sources
- IRS, Publication 3 (Armed Forces’ Tax Guide)
- Cornell Law School, 50 U.S. Code § 4001 - Residence for tax purposes
