Michigan Only the following National Guard pay is considered military pay and therefore "exempt" from Michigan tax: Weeknight and regular weekend drills Summer camp Pay received for riot duty only if nationalized by the president of the U.S. Pay received for duty in the gulf coast states related to Hurricane Katrina ------------------------------------------------ Oregon. Combat Zone income exclusion. Income earned while serving in a combat zone is excluded from Oregon and federal taxation. Military pay earned outside Oregon has been exempt from taxation since 1991 and has already been excluded from tax on the Oregon return. Military pay you earned inside Oregon after you changed from Title 32 to Title 10 status is exempt from tax in Oregon for tax years beginning on or after January 1, 2001. You may subtract the Title 10 military income you earned in Oregon on your Oregon return. Military pay earned outside Oregon is already exempt from tax. Oregon will still tax any other income you have and any income your civilian spouse earned . After November 4, 2005, when the law becomes effective, you may file an amended return claiming the subtraction. On your amended return, explain that you have changed status and include a copy of your orders or other documentation that proves the status change (a letter on military letterhead or evidence from your payroll office, for example). http://www.oregon.gov/DOR/PERTAX/military-faq.shtml