Military pay and Wisconsin state tax

Does the state tax personal income?

Wisconsin imposes an individual income tax under chapter 71 of the Wisconsin Statutes, and the Department of Revenue publishes Publication 128 for military personnel and veterans under it.

Active duty pay

Under sec. 71.05(6)(b)56. of the Wisconsin Statutes, a member of the U.S. Armed Forces may subtract basic, special, and incentive pay received under chapters 3 and 5 of title 37 of the United States Code for active duty. The subtraction cannot exceed the active duty pay included in federal adjusted gross income. Pay for inactive duty training drill weekends, civil service duties, and military schooling outside federal active duty orders is not within the subtraction.

• The subtraction reaches basic, special, and incentive pay under chapters 3 and 5 of title 37 received for active duty.
• The amount subtracted cannot exceed the active duty pay included in federal adjusted gross income.

Stationed outside the state

Publication 128 states that a person who was a Wisconsin resident on entering military service remains a Wisconsin resident for the entire military career unless domicile is changed by positive action or an election is made under 50 U.S.C. section 4001, and that moving from one duty station to another does not by itself change legal residence.

Combat pay

Publication 128 states that combat zone pay excluded federally is not part of the Wisconsin base, and describes a combat zone extension of one hundred eighty days after the later of the last day in the combat zone or the last day of continuous qualifying hospitalization, plus the days remaining in the filing period, with no interest charged during an extension period that qualifies federally.

Military retirement pay

Part 4.A.(1) of Publication 128 states that all retirement payments received from the U.S. military retirement system are exempt from Wisconsin income tax under secs. 71.05(1)(am) and (an) of the Wisconsin Statutes, and that these payments are paid from the Defense Finance and Accounting Service. It further states that all payments received from the U.S. government relating to service with the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the Public Health Service are exempt. The exemption is claimed by subtracting qualified payments on Schedule SB line 12 with Form 1, or Schedule M line 46 with Form 1NPR, and may not exceed the amount of the retirement payment included in federal adjusted gross income. The publication states the additional service and membership conditions in Part 4.A.(2), which is the separate U.S. Civil Service Retirement System exemption under sec. 71.05(1)(a); those conditions are not conditions on the military exemption.

• The subtraction may not exceed the amount of the retirement payment included in federal adjusted gross income.

Survivor benefits

Part 4.A.(1) of Publication 128 states that all retirement payments received from the U.S. military retirement system, including payments from the Survivor Benefit Plan, are exempt from Wisconsin income tax under secs. 71.05(1)(am) and (an) of the Wisconsin Statutes, subject to the same federal adjusted gross income ceiling as the retirement exemption. Publication 128 separately addresses combat zone related death under secs. 71.05(6)(b)48. and 48m.

• The Survivor Benefit Plan subtraction may not exceed the amount of the payment included in federal adjusted gross income.

Guard and Reserve

The active duty subtraction reaches members of the reserve components under 37 U.S.C. section 101(24), including the Army, Navy, Marine Corps, Air Force and Coast Guard Reserves and the Army and Air National Guard of the United States, covering Active Guard Reserve members, full-time National Guard members, and traditional Guard members for annual training. Inactive duty training drill weekend pay is not within the subtraction.

Military spouses

Publication 128 states that a spouse who is a legal resident of another state is not liable for Wisconsin income tax on income from personal services performed in Wisconsin where the spouse is in Wisconsin solely to be with the service member under military orders, while remaining liable on Wisconsin business income not derived from personal services, Wisconsin property, Wisconsin lottery and pari-mutuel winnings, and winnings from a Native American casino or bingo hall in Wisconsin. A service member and spouse may also elect a state of residence under 50 U.S.C. section 4001.

Filing

Publication 128 directs a full-year resident to the Form 1 instructions and a part-year resident or nonresident to the Form 1NPR instructions, and states that a part-year resident or nonresident generally files where gross income reportable to Wisconsin, including income eligible for a Wisconsin subtraction, was $2,000 or more.

• $2,000 or more of gross income reportable to Wisconsin for a part-year resident or nonresident — tax year Publication 128 (1/26), laws enacted as of January 22, 2026

Withholding

Publication 128 identifies Form W-221, Nonresident Military Spouse Withholding Exemption, as the form addressing withholding for a nonresident military spouse.