Pennsylvania Income Tax Exemption for Differential Pay Duri…

Pennsylvania Income Tax Exemption for Differential Pay During Combat Zone Service

Pennsylvania Department of Revenue

Full exemption from Pennsylvania personal income tax on differential pay earned during combat zone service

Differential pay is the gap between your military pay and your civilian wages that your employer makes up while you serve in a reserve component. Pennsylvania normally taxes it, but it is not taxed while you are serving on active duty in a combat zone or hazardous duty area.

Check eligibility

How to apply

There is nothing to apply for. Leave the differential pay you received during combat zone or hazardous duty service off the income you report on your PA-40 return.

What you'll need

Your employer pay records showing the differential pay, and orders showing the combat zone or hazardous duty area service dates.

Eligibility

You are a Pennsylvania resident filing a Pennsylvania personal income tax return
You are serving in a reserve component of the U.S. Armed Forces
Your employer paid you differential pay while you served on active duty in a combat zone or hazardous duty area

Source

Official source

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