Military Income Deduction Information

Section 143.174, RSMo provides a deduction for military income earned as a member of the active duty component of the Armed Forces of the United States. Below is some helpful information regarding the military deduction:

• This deduction may be claimed on the Military Income Deduction line of the Missouri Individual Income Tax Return (Form MO-1040). The 2020 return is the first year this deduction may be claimed.
• The military income must be included in the federal adjusted gross income and not have been previously taken as a deduction or subtraction.
• When submitting your return, include a copy of your Leave and Earnings Statement(s) that validate how long you were on active duty for training or annual training and the amount you earned on active duty for training or on annual training. Failure to attach the required documentation may result in the disallowance of the deduction. A PDF of this documentation should be provided when filing your return electronically.
• The military income deduction is available for the amount of pay received while:
• Ordered to federal active duty status under 10 USC or 32 USC
• Participating in Annual Training (typically 2 weeks a year)
• Participating in other active training or schools, except for Inactive Duty for Training, which does NOT qualify for this deduction.
• All Missouri returns claiming the military deduction will be compared to income data (Form W-2 data) provided by the Defense Finance and Accounting Service (DFAS).

Section 143.175, RSMo Provides a deduction for the military income earned as a member of the Inactive duty components of:

• National Guard Inactive Duty Training (IDT)
• National Guard Annual Training (AT)
• Reserve components of the Armed Forces
• This deduction may be claimed on the Military Income Deduction line of the Missouri Individual Income Tax Return (Form MO-1040). The 2020 return (Line 18) is the first year this deduction may be claimed.
• The military income must be included in the federal adjusted gross income and not have been previously taken as a deduction or subtraction.
• The following reflects the percentage of Military reserve or inactive duty income that may be deducted in each applicable tax year:

• Please include copies of all your Leave and Earnings Statement(s) which validate how long you were on inactive duty for training or annual training and the amount you earned on inactive duty for training or on annual training. Failure to attach the requested documentation may result in the disallowance of this deduction. If you have additional questions about this deduction, you may contact the Department’s military liaison at military@dor.mo.gov.

For tax years beginning on or after January 1, 2016, Section 143,174, RSMo, allows taxpayers a military deduction for the income received as a member of the active duty component of the Armed Forces of the United States.

In November 2017, the Department of Revenue expanded the definition of who qualifies for the military income deduction claimed on the Missouri individual income tax return. The previous definition allowed the deduction for the active duty pay received under 10 USC or Section 32 USC 502(f). The new definition includes the amount of pay received while:

• Ordered to federal active duty status under 10 USC or 32 USC
• Participating in Annual Training (typically 2 weeks a year), or
• Participating in other active training or schools

Taxpayers who qualify under this new expanded definition may file a 2016 Missouri individual income tax return (or amended return) and claim the deduction. In general, refund claims must be filed within three years of the original due date or within two years of the date of payment.

Forms are available on our web site at https://dor.mo.gov/forms/.