You can subtract from your Oregon taxable income the part of your military retired pay you earned for service before October 1, 1991. Pay earned on or after that date cannot be subtracted. If your service spans both sides of that date, divide your months of service before October 1, 1991 by your total months of service and subtract that percentage of your pension, rounded to three places (for example 0.4576 becomes 45.8 percent). Once you retire, Thrift Savings Plan withdrawals qualify on the same basis, but withdrawals before retirement do not, and money moved out of the TSP into another kind of account stops qualifying.
There is nothing to file separately. Claim the subtraction on your Oregon income tax return. For help, contact the Oregon Department of Revenue.
Your Form 1099-R for the retired pay, and a record of your service dates so you can work out the share of service performed before October 1, 1991.
