I’m currently active duty in the United States Navy, is it true military doesn’t pay state taxes? My resident would be in Illinois

[SteamTrain · Accepted solution]

@usieq27 

An Illinois HOR serviceperson, does not get taxed on their Military W-2 income..

BUT

You must file an IL tax return if you are also required to file a Federal tax return.

Any other non-military income may end up getting taxed, and must be reported by Illinois (bank interest, dividends, off-duty job non-military wages, income from investments...any income that is not your military W-2)

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When you enter your Military W-2 in the Federal section of the TTX software, there is one page with a whole list of checkboxes...there is one in the middle that you need to check...indicating that W-2 as being for Active Duty military.

Fill out the Federal section of TTX first...entirely, every scrap, and error checked...then when you walk through the IL Q&A there will be one page where you can subtract your military W-2 income...note that it is the box 1 value from that W-2 that is subtracted.  That value may be lower than boxes 3 or 5 on that W-2 for a number of reasons, but only the box 1 value is allowed to be subtracted.

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Military Pay (illinois.gov)