You are correct, All active duty military (and reserve) pay is tax-exempt in Oklahoma. To resolve this:
- Make sure that both you and your husband are marked as active duty military in the Personal Information screens.
- Make sure that your W-2s are also marked as active duty income on the screen after entering them into TurboTax.
- On the Oklahoma resident return, look for the screen in the screenshot below and make sure that all of the military income is included in the boxes so that it is exempted.
If this results in zero tax for Oklahoma, it is possible that you may not be required to file an Oklahoma tax return, but you may choose to do so that Oklahoma does not question you later. (Instructions for the state tax form are unclear as to whether or not your military income counts as "gross income" for filing requirement purposes. I personally would recommend filing to show the exclusion, even if you have no tax or refund due.)
Here is the screenshot to assist you:
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