Military personnel

Filing requirements

Military pay isn't taxed by Oregon for those who are stationed in Oregon but are domiciled outside of Oregon. Read Publication OR-17 for more information about "domicile." Active service military personnel in Oregon are treated as nonresidents if their address in the payroll records of the Defense Finance and Accounting Services (DFAS) is outside Oregon, regardless of where domiciled.

Nonresidents stationed in Oregon

Oregon doesn't tax your military pay while you are stationed in Oregon. File an Oregon Form OR-40-N if you or your spouse had income from other Oregon sources. Oregon-source income includes wages from an off-duty job or earnings from an Oregon business or rental property. Note: if your spouse is in Oregon because you are stationed here, Oregon won't tax your spouse's wages. See "Spouses of military personnel" below. 

If you had Oregon tax withheld from your military pay, you can file a return to claim a refund.

Residents stationed in Oregon

If you are an Oregon resident stationed in Oregon, file Form OR-40. Active duty Oregon National Guard pay and up to $6,000 of other military pay may qualify for a subtraction (see subtraction information below).

Residents stationed outside Oregon

You're treated as a nonresident for Oregon tax purposes (a "special case resident") if you meet all the following requirements:

• You didn't have a permanent residence in Oregon for yourself or your family during any part of the tax year.
• Your permanent residence was outside of Oregon during the entire tax year.
• You spent less than 31 days in Oregon during the tax year.

You're also treated as a nonresident for tax purposes if you're on active service, other than annual training duty or inactive-duty training, and you are a resident of another state according to the DFAS payroll records. 

You'll only owe Oregon tax if you had income from other Oregon sources. If you have to file a return, use Oregon Form OR-40-N.

Domicile election 

Federal law allows a member of the military and the member's spouse to choose to be treated as a resident of any of the following for tax purposes: 

1. The residence or domicile of the member.
   
2. The residence or domicile of the spouse.
   
3. The permanent duty station of the member.
   

Withholding exemption

You have the option to stop Oregon withholding from your military pay if all the following are true:

• You had a right to a refund of all 2023 Oregon income tax withheld because you had no tax liability.
• You expect a refund of all 2024 Oregon income tax withheld because you reasonably believe you won't have any tax liability.
• You expect to be stationed outside of Oregon all of 2024.

To stop Oregon withholding, you must use Oregon Form OR-W-4 to claim that your pay is exempt from Oregon tax. Enter the appropriate code from the table inside Form OR-W-4 Instructions and write "Exempt" on the form as instructed. Give the completed form to your pay clerk. Submit a new form by February 15 each year that your income is exempt.

Military pay subtractions

You may qualify for one or more of the subtractions below if your federal Adjusted Gross Income (AGI) includes military pay. Military pay includes active duty pay, reenlistment bonuses, and pay for guard and reserve annual training, weekend drills, and inactive duty training.

• Stationed outside Oregon—For military pay earned while stationed anywhere outside Oregon.
• Guard and reserve away from home—For military pay earned by National Guard members or reservists assigned away from home 21 days or more.
  
• Oregon National Guard pay—For service performed by a member of the Oregon National Guard while in active service of the state or on state active duty.
• Other military pay—For any remaining taxable military pay after taking the above subtractions, up to $6,000.
  
  

Your total subtraction can't be more than the total military pay included in your federal AGI. Military pay not included in federal AGI isn't taxed by Oregon and can't be subtracted.

Spouses of military personnel

Nonresident spouse

The federal Military Spouse Residency Relief Act (MSRRA) prevents Oregon from taxing your Oregon wages if:

• You moved to Oregon only to be with your spouse who is stationed here, and
• You are both domiciled outside of Oregon.

Under the federal Servicemembers Civil Relief Act (SCRA), for tax purposes, you may elect to be treated as a resident of the state where the military member is domiciled or has their permanent duty station.

Note: This exemption doesn't apply to spouses who are also members of the military.

Oregon resident spouse living outside of Oregon

Do you qualify to be treated as a nonresident because you meet the special case Oregon resident requirements? If so, your out-of-state wages or self-employment income isn't taxed by Oregon, even if the other state can't tax it under MSRRA. You don't have to file a return unless you had Oregon tax withheld or other Oregon-source income, such as rental income or retirement pay. If you have to file a return, use Form OR-40-N.

Interest and collections

If you owe taxes while on active duty, you may qualify for a reduced interest rate while on active duty and up to six months after your active duty ends.

If your active-duty service affected your ability to pay your Oregon tax liability, you may qualify for relief from interest and collection activity if you meet all these requirements:

• Your tax liability became due while you were on active duty under Title 10.
• You were on active duty for more than 90 consecutive days.
• Your active-duty service occurred on or after September 11, 2001.
• You notify us within six months after your active-duty service has ended.

Guard members called into active state service by the governor under Title 32 may also qualify for relief interest and collection activities on any tax owed prior to active state service.

Send us your request and documents showing your active-duty status and dates within six months of your service ending.

Extensions

Did you get an extension on filing your federal return and paying your 2023 tax because you were stationed in a combat zone or contingency area? Oregon allows this same extension. Mark the "Extension filed" and "Military" boxes on your return.

More information

Read Publication OR-17 for more individual income tax filing information.

For information about military property tax exemptions, visit our Property Tax Division's webpage.

Are you a veteran? See Publication OR-PIT-VET for individual income tax items that may be of interest to you.