Indiana
Military Benefits

Military Pay and State Income Tax

Indiana taxes active duty military pay for residents but fully exempts military retirement pay, a significant benefit for retirees choosing where to settle.

Indiana has a low flat income tax rate of 3.05%. Military retirement pay is fully exempt from Indiana income tax. Active duty pay for non-residents stationed in Indiana is also exempt. For Guard and Reserve members, pay received during state emergencies called by the Governor is exempt; federal training pay (drills, AT) is taxable at the flat 3.15% rate.

VA disability compensation is fully exempt from Indiana state income tax. This is a federal-level exemption honored automatically. This applies to all ratings including partial disability compensation and Combat-Related Special Compensation (CRSC).

Under the Veterans Benefits and Transition Act of 2018, military spouses who maintain domicile in another state do not owe Indiana income tax on wages earned in Indiana while accompanying their servicemember on military orders. This applies regardless of how long the spouse has lived in Indiana.

SBP annuity payments to surviving spouses are included in the military retirement exemption and are fully exempt from Indiana income tax.

Property Tax Exemptions and Discounts

Indiana provides a full property tax exemption for veterans rated 100% permanently and totally disabled by the VA. Additional partial exemptions may apply for veterans with lower disability ratings.

Indiana veterans rated 100% P&T disabled by the VA receive a full property tax exemption on their primary residence, up to one acre. Additional exemptions apply for veterans with a service-connected disability of 10% or more (deduction of assessed value). Apply at your county auditor's office with your VA award letter.

The surviving spouse of a 100% P&T disabled veteran in Indiana retains the full property tax exemption as long as they remain unmarried and continue to occupy the property as their primary residence. The exemption passes automatically without the spouse needing to re-qualify with a new VA rating.

Active duty servicemembers stationed in Indiana on military orders are not required to pay Indiana personal property taxes on vehicles registered in their home state. SCRA protects home-state registration from challenge. If you register a vehicle in Indiana, local personal property tax rules apply.

Vehicle Registration and Driver License

SCRA protects active duty servicemembers from being required to register vehicles in Indiana while stationed here on orders. Indiana also offers veteran-specific license plates and registration benefits for disabled veterans.

Active duty servicemembers are not required to register their vehicles in Indiana while stationed here under SCRA. You may keep home-state plates and registration. Indiana cannot require registration change based solely on military orders. Keep a copy of current orders in your vehicle at all times in case of a traffic stop.

Veterans with a 100% P&T disability rating may receive a vehicle registration fee waiver or significant reduction in Indiana. Free specialty disabled veteran license plates are also available. Contact Indiana BMV, Veterans Services to verify current eligibility and apply.

A Indiana driver license for a servicemember or dependent stationed outside the state does not expire during active duty. The license remains valid for 90 days after separation or return to Indiana. When you PCS back, you will have at least 60 days to renew before enforcement.

Military spouses may maintain their home state vehicle registration and driver license while residing in Indiana due to military orders. They are not required to obtain a Indiana license or plates. This applies regardless of how long they have lived in the state.

Military Spouse Employment and Licensing

Indiana has enacted military spouse licensing reciprocity laws requiring expedited license transfers for qualified professionals. Military spouses may also maintain their home state domicile and vehicle registration regardless of time spent in Indiana.

Indiana Code 25-1-16 requires licensing boards to grant expedited licensure to military spouses within 60 days of a complete application. Covered professions include nursing, teaching, cosmetology, real estate, mental health counseling, and more. Temporary permits are available while full applications process.

Indiana law allows a military spouse who voluntarily leaves employment to accompany their servicemember on a PCS move to collect unemployment benefits. They are not considered to have voluntarily quit without good cause. The spouse must have worked in Indiana prior to the PCS move.

Military spouses of active duty servicemembers are eligible for non-competitive appointment to federal civil service positions under Executive Order 13473. This applies at any federal agency with a presence near Indiana installations, including DoD civilians, VA, and other federal employers.

A military spouse who maintains domicile in another state and works remotely for an out-of-state employer while living in Indiana on military orders may be exempt from Indiana income tax on those remote wages. Indiana-source income may still be taxable. Consult a military-aware CPA for your specific situation.

SCRA, Federal Protections That Apply in Indiana

Indiana courts and landlords are required to honor all federal SCRA protections. Your installation JAG office can provide free legal assistance for any SCRA issue including lease terminations, interest rate caps, and foreclosure stays.

You can terminate any Indiana residential lease with 30 days written notice upon receiving PCS orders or a deployment of 90 or more days. Deliver written notice and a copy of orders to the landlord. Termination is effective 30 days after the next rent due date. Indiana landlords cannot charge early termination fees to servicemembers exercising SCRA rights.

Any debt taken on before entering active duty, including mortgages, car loans, credit cards, and student loans, must be reduced to 6% interest upon written request. Submit written notice with a copy of orders to each lender. The cap applies retroactively, excess interest above 6% is forgiven, not deferred.

Indiana courts cannot foreclose on a servicemember's primary residence during active duty without a court order. The protection extends for 1 year after separation. Contact your installation JAG immediately if you receive any foreclosure notice while on active duty.

Indiana courts must grant at least a 90-day stay of civil proceedings when a servicemember cannot appear due to military duties. Courts cannot enter a default judgment against an active duty servicemember without a hearing and an attorney appointed to represent their interests.

Education Benefits in Indiana

Indiana provides in-state tuition for active duty families stationed in the state. Multiple Yellow Ribbon schools operate in Indiana, covering tuition and fees beyond the GI Bill cap for eligible veterans at participating private and out-of-state schools.

Federal law and Indiana policy grant immediate in-state tuition eligibility to active duty servicemembers stationed in Indiana, their spouses, and dependents. No 12-month waiting period is required. This applies to all Indiana public colleges and universities.

Indiana has multiple Yellow Ribbon-participating schools that cover tuition and fees beyond the GI Bill state cap at no additional cost to the veteran. For veterans with 100% GI Bill eligibility, Yellow Ribbon schools eliminate out-of-pocket tuition entirely. Verify current participation at benefits.va.gov/GIBILL before enrolling.

Indiana National Guard members may receive state tuition assistance supplementing federal MGIB-SR benefits. The program can provide substantial tuition coverage at Indiana public schools. Contact the Indiana National Guard Education Office for current benefit amounts and eligibility.

Dependent children who establish domicile in Indiana and begin enrollment at a Indiana public university do not automatically lose in-state tuition eligibility if their active duty parent PCSes out of state, provided they maintain continuous enrollment.

Voting and Residency Rights

Indiana must honor your right to maintain home-state domicile and vote by absentee ballot. Your installation Voting Assistance Officer can help you register and request a ballot under UOCAVA.

Being stationed in Indiana does not change your legal domicile. You may continue to vote in your home state via absentee ballot under the Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA). Submit a Federal Post Card Application (FPCA) at FVAP.gov. Your installation Voting Assistance Officer (VAO) can assist.

If you want to vote in Indiana and claim it as your home state, register at your county election office. Consider the financial implications of switching domicile, including Indiana income tax rates and property tax rules, compared to your current home state.

Military spouses may independently maintain domicile in any state they choose under VBTA 2018. It does not have to match the servicemember's domicile. Indiana cannot force a spouse to establish Indiana domicile based on their physical presence in the state.

Indiana accepts the Federal Post Card Application (FPCA) as a combined registration and absentee ballot request. UOCAVA voters may request electronic ballot transmission. Submit your FPCA at least 45 days before any election to ensure ballot delivery and return.