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Is military pay exempt from Michigan individual income tax?
Yes, regardless of where your income is earned you are considered a Michigan resident and are required to file a Michigan Individual Income Tax Return MI-1040.
Active duty military pay is exempt from Michigan individual income tax. However most interest, dividends, capital gains, and other income received is subject to Michigan individual income tax. File an MI-1040, Schedule 1, and Schedule W (even if no Michigan tax was withheld) and subtract your military pay, to the extent it is included in federal adjusted gross income.
NOTE: Civilian pay received from the military is not eligible to be subtracted as military pay.