Indiana’s more than 12,000 National Guardsmen will no longer pay state taxes for their service-related income beginning with their 2023 tax returns.

A state law — House Bill 1034 — is in effect and, according to a news release from the Indiana National Guard, the tax exemption applies to the traditional weekend Hoosier Guardsmen, the dual-status and the active National Guard members.

This new tax change in Indiana comes on the heels of the law that took effect in 2022, which phased out state taxes on military veterans’ retirement.

The exemption also applies to Indiana residents who are members of other states’ National Guard organizations.

For example, this question was posed to the Indiana Department of Revenue on whether a person who lives in Indiana can claim an exemption if they serve in the Michigan National Guard.

“The provisions for National Guard members should apply to Michigan National Guard members so long as they meet the provisions as outlined in Information Bulletin #27: Indiana Adjusted Gross Income Tax Applicable to Military Personnel and Spouses,” said Josh Hicks, assistant director of communications for Agency & Business Systems Support with the Indiana Department of Revenue.

Additional information is available on the IDOR’s website for tax information bulletins and military service members, Hicks said.

The tax exemption has been lauded by state veterans groups. The Veterans Coalition of Indiana puts the number of veterans who leave the state at 3,400 a year, and says retaining those soldiers and their families would keep dollars in Indiana’s economy.

Yet, according to the Indianapolis Star, the Legislative Services Agency estimates revenue loss to the state would grow up to $22 million by 2028.

Military personnel must still file an Indiana income tax return if their gross income is more than their exemptions.

This article originally appeared on South Bend Tribune: Tax exemptions begin for Indiana National Guard members