Why do I owe state tax if I am US Active duty military and have lived overseas for the whole entire year of 2016?

[AnnS7 · Accepted solution]

Many states follow federal tax rules - meaning active duty military pay subject to federal income tax will also be subject to state income tax.  Pay that is exempt from federal taxation, such as combat pay, will also be exempt from state income tax.  If your home of record is in one of these states, regardless of where you are stationed in the world, your regular active duty military pay will be subject to state income tax.  Each state has its own tax laws and regulations regarding the taxation of military members.

See the link below and choose your state for further information:

https://ttlc.intuit.com/questions/1899163-military-filing-information-on-state-websites