What military pay constitutes a Virginia "other subtraction from federal income?"

Forum|Forum|6 years ago
June 5, 2019
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Specific only to Virginia, in the "state taxes" portion of the program.

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Best answer by ToddL

From the VA 2016 Form 760 Resident Individual Income Tax Booklet:

Virginia law provides 3 "other" subtractions for military service members:

military pay and allowances earned while serving in a combat zone or qualified hazardous duty area (Va. Code § 58.1-322 C 21);

military basic pay (up to $15,000) for personnel on extended active duty for periods in excess of 90 consecutive days (Va. Code § 58.1-322 C 23); and
wages or salaries received for active and inactive service in the National Guard of the Commonwealth (Va. Code § 58.1-322 C 11).

ToddLAnswer

Employee

From the VA 2016 Form 760 Resident Individual Income Tax Booklet:

Virginia law provides 3 "other" subtractions for military service members:

military pay and allowances earned while serving in a combat zone or qualified hazardous duty area (Va. Code § 58.1-322 C 21);

military basic pay (up to $15,000) for personnel on extended active duty for periods in excess of 90 consecutive days (Va. Code § 58.1-322 C 23); and
wages or salaries received for active and inactive service in the National Guard of the Commonwealth (Va. Code § 58.1-322 C 11).

Nat in real life

UPDATE on Military Benefits Subtraction (also known as the Military Retirement Subtraction), the eligible military benefits subtracted must be included as income on your federal income tax return and you may only subtract up to:

$20,000 of eligible military benefits on your tax year 2023 return;
$30,000 of eligible military benefits on your tax year2024 return; and
$40,000 of eligible military benefits on your tax year 2025 and later returns.

The following military benefits are eligible for the Military Benefits Subtraction:

Military retirement income received for service in the Armed Forces of the United States;
Benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States under the Survivor Benefit Plan program established by the U.S. Department of Defense; and
Military benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States.

While Virginia law also allows the Military Benefits Subtraction for “qualified military benefits” as defined under federal tax law, these are not included as income on your federal and Virginia income tax returns. Since they’re already not part of your income, they cannot be subtracted at this time.

Example: Taxpayer A is a 65-year-old military veteran who receives military benefits that include $10,000 in military pension income that was included in Taxpayer A’s federal income for tax purposes and $2,000 in travel benefits under Operation Hero Miles. Because the $2,000 in travel benefits under Operation Hero Miles are considered “qualified military benefits” under federal law, they were excluded from Taxpayer A’s federal income for tax purposes. Taxpayer A may subtract the $10,000 in military pension income benefits but may not subtract the $2,000 in travel benefits that were not included in Taxpayer A’s federal income.

Source; https://www.tax.virginia.gov/military-benefits-faq