what taxes are the military exempt from?

Question

And also after you discharged are you still exempt?Plus does the military have loans to help you buy a home after you discharged. Are the loans reasonable?Thank You any advice will help.

Answer 1

The general service member will pay federal taxes on his pay. But some of the allowances aren't included as income when they figure that amount. If they deploy to a "war" zone as authorized by congress the entire pay for that period is tax free from the income tax portion but you still pay SS and medicare taxes.

State taxes depend on what your state of record is. Some states don't tax active military on income while others do. Some give breaks on other taxes like car registration. Know your state laws to figure those out.

For retired pay, again each state is different on what it taxes. http://www.cga.ct.gov/2005/rpt/2005-r-01... <---has a pretty good rundown on what each state does.

If the military member serves honorably they will qualify for a VA loan. That gives you a lower down payment among other things. And it's not just a one time loan. If you use the loan and then repay it in full you can use it again for your next house. http://www.homeloans.va.gov/

Answer 2

Active Duty members serving in a combat zone are exempt from all taxes. Some states do not tax military income regardless of where you are serving , but each state is different. If you are discharged you become just a regular old tax paying citizen. Now if you retire some states will continue to not tax your military retirement. As long as you are a veteran, and you did not lose your benefits, you can acquire VA loans. People are mislead by that term though. The VA does NOT loan you money, they simply back your loan. You must apply for it and obtain a certificate of eligibility before using the VA to obtain a loan through a bank or lender.

Answer 3

Military members are not exempt from any taxes, unless deployed to a combat zone. Then they are exempt from federal income taxes, and possibly state taxes if the state they are a resident in offers a similar benefit.

Military members do receive non taxable allowances for housing and food in their pay that offer a significant tax advantage.

For example an E-3 stationed at Fort Meade, MD (Enlisted member of any service who has been in for one year) living with their family in an apartment earns the following

Base pay (taxable) 1,534.20
Housing Allowance 1,318.00
Separate Rations 279.88

So their gross take home would be 3132.08 a month, but only 1534.20 is taxable income. So less than half of the money received is taxable.

State taxes will vary, but the advantage for military is that the soldier living in Maryland who enlisted from their home state without state income taxes (say Florida) can claim Florida for their state of residence and avoid Maryland Taxes.

What's even better if a soldier that came from Maryland was assigned to Florida and established residency (usually getting a driver's license from the state) when they get reassigned they can keep the Florida Residency and avoid State Income taxes at their new post.

That is the advantage.

If you serve more than 27 Months and receive an honorable discharge you are eligible for a Veteran's Home Loan Guarantee. The loan's allow you to buy without a down payment in some cases, keep you from having to pay mortgage insurance, and the rates are competitive.

Answer 4

You are only exempt from taxes while in a combat zone. Once you return stateside any applicable taxes come back. You are eligible to get a VA home loan as soon as you complete a tour of combat, or your first enlistment is up. The rates are the same as you would get at any bank, but the VA gurantees the loan to the lender.

Answer 5

Military pay can be tax-exempt. During 18 years of my career, my income was tax-exempt. It depends a lot on your job. if you spend time in a combat zone then you will not pay income taxes. However there are many jobs within the military where you might always be paying income taxes.

Answer 6

Seems like a lot of people know the answer to this question. I just have a comment:
Isn't it disgusting that veterans have to pay any taxes(including SS and Medicare), anytime, even once they've been discharged? I once knew a guy that served in the German army during World War Two, immigrated to the US, became a citizen, and was still receiving monthly checks until he died from his former government because he had been a soldier.
Our government should be ashamed of themselves for treating veterans so poorly.

Answer 7

during deployments to a combat zone ONLY they are exempt from federal and state income tax, that's it. they still must pay FICA and Social Security. once you are out, no more exemptions.

Qualified individuals may utilize the VA Home loan. you can catch a break on closing costs, can go no money down and lock in a semi decent interest rate, assuming your credit score is good enough.

Answer 8

VA loans are only good for up to 250,000.
You're no longer exempt unless you remain on TAD at your unit, although this may have changed in the last year.
Get a Financial Advisor. Waddell and Reed helped me out a lot.

Answer 9

Critter has the right answer. The only time a military member is exempt from taxes on their paycheck is when they serve in a combat zone. Any other time you are responsible for all state and fed taxes along with sales taxes on everything purchased anywhere but AAFES and the Commissary.

Answer 10

while deployed to a combat zone we have a czte (combat zone tax exclusion) where we do not pay taxes on the first 85000 we earn that year. for any service member that works out to no tax due to te fact that we dont make over 85000 in a year. once we are out of the combat zone we continue to pay state and federal tax. yes we have veterans loans. and they are more than reasonable. low rates and guaranteed financing are almost all the time norms.