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Michigan Does Not Tax Active-Duty Pay — but You Have to Subtract It Yourself

Michigan does not tax military pay for active service. It is not automatic: the pay arrives inside your federal adjusted gross income and stays in your Michigan taxable income unless you SUBTRACT IT ON SCHEDULE 1 of the MI-1040. Treasury's guidance is that non-residents stationed in Michigan are not taxed on active-duty pay either. One thing to watch — civilian pay received from the military is not military pay for this purpose, so a DoD civilian post does not qualify.

Verified August 27, 2026

What this benefit is

Michigan does not tax military pay for active service. It is not automatic: the pay arrives inside your federal adjusted gross income and stays in your Michigan taxable income unless you SUBTRACT IT ON SCHEDULE 1 of the MI-1040. Treasury's guidance is that non-residents stationed in Michigan are not taxed on active-duty pay either. One thing to watch — civilian pay received from the military is not military pay for this purpose, so a DoD civilian post does not qualify.

What it's worth: Active-duty military pay fully subtracted from Michigan taxable income

  • The subtraction is taken on SCHEDULE 1 of the MI-1040, to the extent the pay is included in federal AGI.
  • It is not applied for you. A return filed without the subtraction pays Michigan tax on the pay.
  • Treasury's guidance is that non-residents stationed in Michigan are also not taxed on active-duty pay.
  • CIVILIAN pay received from the military is not eligible.
  • The saving depends on your pay and Michigan's rate for the year, so no single figure applies.

Who is entitled to it

  • You serve or served in the U.S. armed forces.
  • You are receiving active-duty military pay.
  • Michigan sets this subtraction.

Not sure whether that describes you?

Answer a few questions about this benefit specifically — we only ask what this one actually depends on, and we stop as soon as we know.

How to claim it

Deadline: With the annual MI-1040
  1. 1Take the subtraction on Schedule 1 of the MI-1040 for the amount of military pay included in your federal AGI.
  2. 2Check the last three years of returns. If the subtraction was missed, Michigan allows amended returns within the statutory period.
  3. 3Keep your Leave and Earnings Statements — they separate military pay from anything else.
  4. 4If you are stationed in Michigan but domiciled elsewhere, check Treasury's non-resident guidance before filing as a resident.
  5. 5If part of your income is civilian DoD pay, separate it. Only the military pay is subtracted.
Form
MI-1040 Schedule 1
File with
Michigan Department of Treasury
Annual
Claimed once a year.
Worth knowingMichigan already had a record for military retirement pay. This is the separate treatment of pay for current active service.

Sources

This finder provides an informational match, not a government eligibility determination. The responsible agency decides your application.