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Tax exemptions affect residents of KY, MN, NM and OK

Tax exemptions affect residents of AR, KY, MN, NM and OK

Military members claiming legal residency in Arkansas, Kentucky, Minnesota, New Mexico and Oklahoma may have all or part of their qualifying military pay exempt from state income taxes.

More information on these changes is available at:

Exceptions:

Certain pay received by military members is not exempt from state income tax withholding. These include:

  • Cadets and midshipmen – Arkansas/Kentucky/Minnesota/New Mexico/Oklahoma
  • ROTC, including the ROTC pay of dual status members – Arkansas/Kentucky/Minnesota/New Mexico/Oklahoma
  • College First – Arkansas/Kentucky/Minnesota/New Mexico/Oklahoma
  • Medical stipends, including Nurse Candidate Continuation bonuses – Arkansas/Kentucky/Minnesota/New Mexico/Oklahoma
  • Active Guard Reserves (AGRs) - Minnesota
  • Drill pay - New Mexico

Active component members for Army, Navy and Air Force and Reserve component members serving over 30 days on active duty for Navy who are legal residents of Kentucky, New Mexico and Oklahoma will have their exemption automatically processed.  All others who are exempt should use myPay or file a state withholding exemption certificate with their finance office to claim the exemption.  If state tax has been withheld for exempt pay, a refund can be obtained when filing the state tax return.  The pay system cannot process exemptions retroactively and so cannot refund state taxes.

If a member receives exempt pay and changes to non-exempt pay the exemption status must be changed.  Not changing your status to non-exempt may result in under withholding and state tax owed at the end of the year.  As an alternative to filing exempt, a refund may be obtained when filing the state tax return at the end of the calendar year.

Page updated May 22, 2014