As tax season approaches, Hoosier National Guardsmen will no longer pay state income tax starting with their 2023 tax returns.
In April, the Indiana legislature passed the military exemption bill, House Bill 1034, and on May 1st, Gov. Eric J. Holcomb signed it into law. The tax exemption applies to all Hoosier Guardsmen, which includes traditional members, military technicians, and full-time National Guard soldiers and airmen.
According to the Indiana Department of Revenue, a member of the National Guard is allowed a deduction from adjusted gross income for wages earned as a result of the member’s military service, including service for National Guard state active-duty missions and federalized overseas missions.
The exemption also includes wages earned as a dual-status military technician. A dual-status technician works full-time for the National Guard and must serve in the National Guard for that employment.
Exemptions do not apply to non-dual-status technicians or independent military contractors. Exemptions also do not apply for wages earned from employment outside of military service.
Military personnel are required to file an Indiana income tax return if their gross income exceeds their exemptions. Income from all sources, both military and non-military, excluding military combat zone compensation, should be reported on the Indiana resident return, Form IT-40, even if the income is deducted in full for Indiana tax purposes.
More information can be found online at in.gov/dor/files/reference/ib27.pdf.
