@SteamTrain - Yes, the NY software deals with it automatically. See the answer I posted below. There's really nothing to deal with. Income is transferred from the federal return to the NY return. If the combat pay is not included in federal income, it won't be included in NY income. The NY instructions allow a specific subtraction for combat pay that was included in federal income. That's what the question that the OP is asking about in the NY interview is referring to. But I don't know under what circumstances you would have combat pay included in federal income.
