Income Tax for Active-Duty Military

This page covers information for active-duty military, their spouses, and their children.

Military members

Idaho residents stationed in Idaho

The military income that an Idaho resident stationed in Idaho earns is subject to Idaho income tax. See pdf Form 40, Idaho Individual Income Tax Return (for Idaho residents) 

Idaho residents stationed outside of Idaho

Active-duty military income that an Idaho resident earns outside Idaho isn’t subject to Idaho income tax. The full-time duty must be continuous and uninterrupted for 120 consecutive days or more. See:

  • pdf Form 40, Idaho Individual Income Tax Return (for Idaho residents)
  • pdf Form 39R, Idaho Supplemental Schedule (for Idaho residents)

Nonresidents stationed in Idaho

If your military home of record is a state other than Idaho but you’re stationed in Idaho, you’re considered a “military nonresident.” Your active duty military income isn’t subject to Idaho income tax. However, all other types of Idaho source income (for example, a part-time job) are subject to Idaho income tax.

pdf Idaho nonresidents must file an Idaho income tax return if gross income from Idaho sources is more than $2,500. More examples of Idaho sources of income include:

  • Idaho nonmilitary salaries, wages, and commissions of the service member
  • Income from unincorporated business activity that either spouse conducts in Idaho, unless it’s the spouse’s personal service business
  • Distributive share of income or loss from a partnership or S corporation transacting business in Idaho
  • Rents and royalties from real and tangible personal property located in Idaho by either spouse
  • Sale or exchange of Idaho real property
  • Winnings from lottery tickets purchased in Idaho

Extensions to file taxes when on active duty in a combat zone

Idaho follows the Servicemembers Civil Relief Act and Internal Revenue Code section 7508 for Idaho individual income taxes. Below are some of the ways the federal and state laws affect you if you’re an Idaho military member called to active duty in a combat zone.

Extended due date

  • All tax filing deadlines are extended for at least 180 days after your last day in a combat zone. If you choose to file while you’re in a combat zone, see below for signature information.
  • If you pay your income tax in full by the end of the deferral period, you won’t owe interest or penalty for that period.
  • If you’re an enlisted member or warrant officer, you don’t owe tax on military pay received for any month in which you served in a combat zone. If you’re a commissioned officer, the monthly exclusion is capped at the highest enlisted pay, plus any pay you received for  hostile fire or imminent danger. The excluded pay shouldn’t be included in the wages reported on your Form W-2.
  • Federal law doesn’t cover business tax returns, employment taxes, or sales and use tax obligations.
  • On your Idaho return, you must write “COMBAT ZONE” and the date of deployment in red on top of the return.

Filing while serving in a combat zone

If you’re serving in a combat zone and can’t sign your joint income tax return, your spouse can sign the return for you without a power of attorney. Your spouse should attach a signed statement to your return that explains you’re serving in a combat zone. If you’re filing an electronic return, keep a copy of the statement with your federal Form 8453.

Federal taxes and service members

You can find more information on how federal taxes affect members of the armed forces in IRS Publication 3, Armed Forces’ Tax Guide.

For more information about federal taxes and service members, visit the Internal Revenue Service’s Military Web page.

Civilian spouses or children of military nonresidents

When a civilian spouse or children of a military members move to Idaho, they become Idaho residents, or part-year residents if they reside in Idaho for less than the entire year. Income from all sources that your civilian spouse or children earn while residents of Idaho is subject to Idaho income tax, unless the exemption below applies.

Tax residency rules for service members and their spouses

Section 19 of the Veterans Auto and Education Improvement Act of 2022 (H.R.7939) made amendments to the tax residency rules in the Servicemembers Civil Relief Act. Under these amendments, military service members and their spouses may elect, for tax purposes, to be considered residents and domiciled in either the service member’s state of domicile, the spouse’s state of domicile, or the state of the service member’s permanent duty station.

How to claim the exemption

  • If you qualify for the service member’s spouse income tax exemption, you can claim an exemption on your wages from Idaho withholding by filling out pdf Form ID-MS1, Employee’s Idaho Military Spouse Withholding Exemption Certificate, and giving it to your employer.
  • Your employer will keep a copy.
  • You’ll need to complete a new form each year you qualify.

Filing

Idaho works with some tax software providers that allow you to do your taxes and file for free if you meet certain requirements. See E-filing Your Income Taxes for Free. 

If you don’t qualify for free filing, see other software providers here.