Individuals

Filing requirements

Military pay isn't taxed by Oregon for those stationed in Oregon, but domiciled elsewhere. 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.

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

Residents stationed in Oregon

If you are an Oregon resident stationed in Oregon, file Form OR-40.

Residents stationed outside Oregon

You're a nonresident for Oregon tax purposes if you meet all of 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 Oregon during the entire tax year.
  • You spend less than 31 days in Oregon during the tax year.

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

Withholding exemption

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

  • You had a right to a refund of all 2017 Oregon income tax withheld.
  • You expect a refund of all 2018 Oregon income tax withheld.
  • You expect to be stationed outside of Oregon all of 2018.

To stop Oregon withholding, file a Form W-4 specifically for Oregon in addition to your federal Form W-4. Write "exempt" on line 7 and write "For Oregon Only—Stationed Outside Oregon" at the top. Give this form to your pay clerk.

Military pay subtractions

You may qualify for more than one of the subtractions below if your federal adjusted gross income (AGI) includes military pay. Military pay is: 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.
  • 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 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 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.

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, you aren't taxed on your out-of-state wages or self-employment income, even if the other state can't tax you because of the federal Military Spouse Residency Relief Act. You don't have to file unless you had Oregon tax withheld or other Oregon source income, such as rental income or retirement pay. If you file, 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.

If your active duty service affected your ability to pay your Oregon tax debt, you may qualify for relief of interest and collection activity if you meet all of these requirements:
  • Your tax liability came 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 of 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 2017 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