SECTION 710:50-15-51. Military pay of nonresidents and income earned by spouse of nonresident servicemember

(a)   Military pay earned in Oklahoma by nonresident personnel, stationed in Oklahoma while on active duty, shall be exempt from Oklahoma income tax. These earnings are treated as "out-of-state income. This exemption applies only to military pay earned in Oklahoma; any other income from the performance of a service other than military duty is subject to Oklahoma income tax.

(b)   Beginning with tax year 2009, a nonresident spouse of a nonresident servicemember may be exempt from Oklahoma income tax on income from services performed in Oklahoma if all of the following conditions are met:

(1)   The servicemember is in Oklahoma in compliance with military orders;

(2)   The spouse is in Oklahoma to be with the servicemember; and

(3)   The spouse maintains the same domicile as the servicemember or, for tax years beginning on or after January 1, 2018, elects to use the same residence for tax purposes as the servicemember in accordance with the Veterans Benefits and Transition Act of 2018.

(c)   The following types of income of a nonresident spouse of a nonresident servicemember are not exempt from Oklahoma income tax:

(1)   Income from an unincorporated business activity conducted in Oklahoma.

(2)   The distributive share of the Oklahoma part of partnership income, gains, losses or deductions.

(3)   The distributive share from Subchapter S Corporations doing business in Oklahoma.

(4)   Net rents and royalties from real and tangible personal property located in Oklahoma.

(5)   Gains from the sales or exchanges of real property, located in Oklahoma.

[Source: Amended at 28 Ok Reg 935, eff 6-1-11; Amended at 37 Ok Reg 2227, eff 9-11-20]