Military personnel make great sacrifices serving our country, some personal and some financial. Our great state of Oregon recognizes those sacrifices and offers  some special tax privileges to compensate for these sacrifices. If you serve in the military, or are considering enlisting, here are some of the tax breaks Oregon offers for you to keep in mind:

• Changes in Oregon Law- Military personnel performing active service within Oregon are treated as nonresidents for tax purposes if their address in the payroll records of the DFAS is outside Oregon, regardless of where they are domiciled. This means your military pay will not be taxable by Oregon. This is a new law and is retroactive to January 1, 2012.
• Spouse Income- Oregon follows federal law, including the Military Spouse Residency Relief Act (MSRRA). Under MSRRA, your spouse’s income may not be taxable to Oregon if certain criteria are met.
• Stationed outside Oregon- You can subtract military pay earned while stationed anywhere outside Oregon, until the date the president sets as the end of combat zone activities in the Persian Gulf Desert Shield area. You are not required to be stationed in a designated combat zone to be eligible for this subtraction.
• Guard and Reserve Away from Home- National Guard members and reservists assigned away from home for 21 days or longer can subtract their military pay earned during this time.
• Other Military Pay- After taking eligible subtractions for “Stationed outside Oregon” and “Guard/Reserve Away from Home” pay, any remaining taxable military pay can be subtracted, up to $6,000.

These tax privileges can get a bit confusing as far as how they translate to a tax return and whether or not one qualifies for them. If you believe you need a return amended in order to take advantage of these tax breaks, or want further clarification on these items, please call Isler CPA and ask for Joseph Lewis or Eric Bell. For more on Oregon military tax breaks, refer to Publication 17 ½ at the link below. Download the Whitepaper