A Tax Break with a Patriotic Purpose
Oregon has taken a remarkable step in recognizing the sacrifices and contributions of National Guard members by implementing a tax break for these dedicated individuals. The tax change specifically impacts the income tax of Oregon National Guard members, providing significant relief for those who serve in this important capacity.
What the Tax Change Entails
The key aspects of the tax change for the Oregon National Guard include:
Exemption from State Income Tax: Oregon National Guard members who are called to state active duty are now exempt from paying state income tax on their military income. This exemption not only eases the financial burden on service members but also helps retain experienced personnel in the National Guard. Previous tax law only allowed a $6,000 income exclusion, which provided most National Guard and Reserve service members a tax break for service while providing monthly drill and annual training. However, if service members served for a longer period of time on state orders, or served as regular active duty, much of their income was taxed on the state level. The new exemption will now allow those serving on regular active duty or those with orders for state service.
Reservists Benefit Too: This tax change extends to members of the National Guard who are also reservists. This means that even if they are not called to active state duty, they still enjoy the tax benefits.
Retroactive Benefits: Importantly, these tax benefits are retroactive, ensuring that members who have served in previous years can also claim the tax break they deserve. You may want to work with your accountant, especially if you deployed or served on state orders or as activity duty in a previous tax year; amending your tax return may result in a tax refund.
Spouses Are Included: In the event of a National Guard member’s death in service, surviving spouses are eligible for these tax benefits as well.
The Impact on Oregon National Guard Members
The Oregon National Guard tax change brings numerous benefits to those who serve in this essential role:
Financial Relief: Members of the National Guard may now adjust withholding on their W-2 income from their service, and enjoy more significant take-home pay, which can help support their families and improve their overall financial stability.
Retention and Recruitment: This tax change is expected to bolster retention rates in the National Guard, as well as attract new recruits. It shows potential members that Oregon recognizes and values their service.
We will keep you posted on any further developments. You may want to work with your accountant and look back on your service record and see if you received more than the previous $6,000 exclusion while on service; an amendment may be beneficial to you.