Important Nebraska state tax information for Guard, Reserve Airmen Published March 13, 2008 OFFUTT AIR FORCE BASE, Neb. -- Pay received for state service in the Nebraska National Guard is taxable by Nebraska regardless of the residence of the servicemember. All of this pay, subject to federal withholding, is also subject to Nebraska withholding. If a nonresident of Nebraska is called up to active duty from the Nebraska Guard, this active duty income is deducted on Nebraska Schedule I. Pay for service in the Reserves and other than state service in the National Guard is pay for military service. This pay is taxable only by the state of legal residence of the member. It may be subject to withholding by the state of legal residence. Any above-the-line deduction, before calculation of federal adjusted gross income, allowed federally to National Guard and Reserve members for overnight transportation, meals, and lodging expenses for travel more than 100 miles to attend Guard and Reserve meeting, is also allowed for state purposes.