Drill Pay State Tax Map

Federal income tax applies to all military pay, including IDT (drill) pay, AT pay, ADOS pay, and Title 10 pay. The only federal exclusions are the Combat Zone Tax Exclusion (IRC §112) and a handful of specific allowances. Drill pay shows up in box 1 of your W-2 and on your federal return like any other wage.

State income tax is where it gets interesting. Each state runs its own rules for how it taxes military pay, and the rules vary by pay category:

• IDT payDrill weekend pay — Inactive Duty Training. Earned for the standard MUTA-4 weekend.
• AT payAnnual Training — federal active-duty-for-training orders, typically 14 days/year.
• ADOS / Title 10Active Duty for Operational Support — federal active duty orders for a specific mission.
• SAD payState Active Duty — Guard service paid by the state for state missions (e.g., hurricane response).

Some states exempt all four. Some exempt only AT and ADOS. Some exempt only IDT pay up to a dollar cap. Some tax all of them. SAD pay is the wildcard — it is paid by the state, and the state paying it almost always taxes it as wages.

Which state has authority to tax you? Your state of legal residence (SLR), not the state where you drill, not the state your unit is in, not your home of record. The Servicemembers Civil Relief Act (SCRA, 50 USC §4001) protects your right to maintain a single SLR even when stationed elsewhere on active duty, and most states extend the same protection to Reserve and Guard members on federal orders. The state where you drill cannot tax you on drill pay unless that state is also your SLR.

These nine states impose no general state income tax on wages. If your state of legal residence is one of them, your IDT, AT, ADOS, and SAD pay all flow through untaxed at the state level. Federal tax still applies.

These states have a personal income tax, but the legislature has carved out a categorical exemption for military pay — drill, AT, ADOS, and federal active duty pay all qualify. Pennsylvania is the gold standard on the drill-pay-specific question; Illinois, Michigan, Ohio, Iowa, Kentucky, and a few others have similarly broad exemptions.

These states cap the exemption — sometimes a flat dollar amount of military pay subtracted, sometimes a phase-out based on total military pay, sometimes a percentage. Common shape: first $X exempted, then it phases out. Read the cap carefully — Mississippi's $15,000 Reserve/Guard exclusion is very different from Oklahoma's $1,500.

These states tax IDT and AT pay as ordinary wage income. Many of them have other strong military benefits (e.g., full military retirement exemption — Kansas, Nebraska, Utah, Wisconsin, West Virginia, Missouri all fully exempt retirement) but those benefits do not extend to drill pay. Several also have a separate rule for federal active duty pay earned outside the state, which is the SCRA pattern.

The Servicemembers Civil Relief Act (50 USC §4001, formerly §571) lets you maintain a single state of legal residence (SLR) regardless of where you are stationed or where you physically live. Three terms get confused here, so be precise:

The Guard nuance: SCRA was written for active-duty service members. For Guard members, SCRA protections kick in when you are called or ordered to federal active duty for more than 30 consecutive days (Title 10 or qualifying Title 32 §502(f) duty). For routine drill weekends, you are not in "active service" under SCRA, but the state-of-legal-residence rule still controls because your SLR is what your state tax filing is based on regardless of duty status.

What this means in practice: A drilling Guard member whose SLR is Texas (no tax) who drills in California pays no California tax on drill pay. A drilling Reservist whose SLR is California pays California tax even if every drill is performed in Texas. The state of drilling is irrelevant.

Under MSRRA (originally codified at 50 USC §4001 alongside SCRA), a civilian spouse of a service member may elect to use the service member's state of legal residence for income tax purposes, regardless of where the family is physically located, as long as the spouse is in that state because of military orders. The 2018 Veterans Benefits and Transition Act (VBTA) expanded this rule — the spouse can now adopt the service member's SLR even if the spouse never lived in that state.

Example: Service member is a Florida SLR (no tax). Family lives in Virginia on the SM's orders. Spouse works at a Virginia hospital. Under MSRRA + VBTA, the spouse may elect Florida as their SLR and not owe Virginia income tax on the hospital wages. The spouse files no Virginia return and Florida (because Florida has no income tax) collects nothing either.

For Guard families: MSRRA / VBTA protections apply when the service member is on military orders that bring the spouse to the state. For purely drilling Guard service in the home state (where the spouse already lived), there's nothing for MSRRA to relieve. But once the SM is on Title 10 or qualifying Title 32 orders elsewhere and the spouse joins them, the protection applies.

DD Form 2058 tells DFAS (or your Guard pay office) which state to withhold income tax for. It is the administrative step that operationalizes your SLR choice. Submit it to your servicing finance office; the change typically takes 1-2 pay periods to reflect on your LES.

What states require for an SLR change. Submitting DD 2058 alone is not enough to establish a new SLR — the state you are claiming as your new SLR has the final say on whether you qualify as a domiciliary for its tax purposes. States generally look at a combination of:

• ◆Physical presence in the state during periods of leave
• ◆Vehicle registration in the state
• ◆Voter registration in the state
• ◆Driver license issued by the state
• ◆Home ownership or long-term rental in the state
• ◆Banking and financial accounts established in the state
• ◆Intent — your sworn statement that this is your permanent home

When NOT to change. If your current SLR is one of the nine no-tax states, you generally want to keep it. Service members from Texas, Florida, or Washington often hold onto those SLRs for the rest of their careers — the savings compound annually. Changing to a high-tax SLR mid-career rarely makes sense unless there are specific non-tax reasons (e.g., spouse's state-specific employment situation, a true permanent move).

Under IRC §112, military pay received during any month in which the service member served at least one day in a designated combat zone is excluded from federal gross income. Enlisted members get full exclusion; officers cap at the highest enlisted basic pay + Hostile Fire Pay/Imminent Danger Pay rate. Almost every state with a personal income tax conforms to this exclusion — meaning combat zone pay is also out of state taxable income.

For Reserve and Guard members on deployments, this is a big deal. A Guard member on Title 10 orders to a designated combat zone receives the same exclusion as an active-duty SM. The exclusion is tracked on your W-2 (Box 12 Code Q) and you do not include it in either federal or state gross income.

What the CZTE does NOT cover: Routine CONUS drill weekends. CZTE applies only to designated combat zones (currently the Afghanistan area of operations, the Arabian Peninsula AO, the Kosovo AO, and Sinai under the MFO arrangement — verify current designation at the DoD Combatant Command pay tax page). Pre-deployment training in CONUS is not in a combat zone, even if it's preparing you for one.