Currently, at the national level, the order in effect to activate service members to provide COVID-19 related assistance is the President’s Executive Order of March 27, 2020.
Governor Bullock has also implemented the activation of the Montana National Guard for state purposes.
This impacts the state taxation of the related military income as follows:
Montana National Guard salaries continue to be subject to Montana income tax.
Montana law provides that salaries received by National Guard servicemembers are exempt from Montana income tax only if received while serving under an order issued pursuant to United States Code Title 10, or for service in a homeland defense activity as defined in 32 U.S.C. 901 or in a contingency operation as defined in 10 U.S.C. 101.
Orders received by the Montana National Guard servicemembers to provide COVID-19 related support in Montana were issued by Governor Bullock. These orders were not issued as part of a homeland defense activity or contingency operation. As such, the salaries received while serving under these orders are not exempt from Montana income tax.
We recognize that the response to COVID-19 is ongoing. Therefore, we are committed to monitor the National Guard’s response to this emergency, as well as the corresponding federal and state orders issued relative to their service, to ensure fairness in our decisions regarding their wages.
Reserve Component of the Armed Forces
The Executive Order of March 27, 2020, was issued pursuant to United States Code, Title 10 by the President of the United States and specifically addressed members of the Ready Reserve. As such, salaries received by Reservists who were ordered to service as part of this Executive Order are exempt from Montana income tax.