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Individual Income

Military Personnel – Income Exemptions
Public Law 180-189 – Servicemembers Civil Relief Act
Effective Beginning Tax Year 2003

MILITARY SPOUSES RESIDENCY RELIEF ACT
Under this Act, a state cannot impose its state income tax on the income earned by spouses of military personnel when 

  • the spouse is a non-resident of the state; and

  • the spouse is in the state solely to be with the service member who is serving in compliance with military orders.  

To exempt the spouse’s income, use VT Schedule IN-113, Part II, Line 34.  When e-filing, an examiner may request clarification that this is exempt spouse income.  If filing by paper, write “Military Spouses Residency Relief Act” on the top of VT Form IN-111.

For Non-VT Resident Military Personnel only
New Public Law 180-189, Servicemembers Civil Relief Act, prohibits states from including pay for military service* received by nonresidents to determine the state tax on other taxable Vermont income. A non-VT resident uses Form IN-113 to compute the proportion of Vermont to non-Vermont income. All income, other than the military service pay, of the non-resident still needs to be included in the computation.

Federal taxable income includes the military pay. Previously, the nonresident started with the Federal taxable income and used Form IN-113 to apportion Vermont to non-Vermont income. Under Public Law 180-189, the nonresident now completes another Federal income tax return excluding the military pay from Federal taxable income. This is known as recomputing. This second Federal return is for VT purposes only and is attached to the VT income tax return. It is not filed with the IRS.

* Military service is defined as :

  • Active duty for members of the Army, Navy, Air Force, Marine Corps and Coast Guard

  • Call to active duty for more than 30 consecutive days for response to a national emergency funded by Federal funds for National Guard members

  • Active service by a commissioned officer of the Public Health Service or National Oceanic and Atmospheric Administration

  • Time the service member is absent from duty due to sickness, wounds, leave or other lawful cause

Taxpayer Information Line:
1.866.828.2865 (Toll-free in VT)
or 802.828.2865 (Local & Out-of-State)

 


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Vermont Department of Taxes, 133 State Street, Montpelier, Vermont 05633-1401