Interesting coincidence with this thread and my real life. On Friday I received a letter from the state of CA asking me to clarify why I haven't filed state income taxes for the past three years. There's a box on their form that essentially says "Non-resident Active duty military AND does not maintain a domicile in CA AND has no CA income to report. After referring to their FTB Pub 1032 "Tax information for military personnel," I found the following interesting (and helpful) tidbits.
1. Domicile for the purposes of determining residency means where you maintain a true, fixed home and permanent establishment to which you intend to return and which you intend to make your permanent home.
2. Military members domiciled outside of California are considered nonresidents for tax purposes even when stationed in California on PCS orders.
3. A person shall not be deemed to have acquired a residence or domicile in any state solely by reason of being there in compliance with military orders.
4. Compensation for military service is not considered to be from sources within the state where a member is stationed if that state is not the member’s domicile.
Basically, if you PCS to CA and don't intend for CA to be your permanent home after completion of your military service, then you're exempt from state income taxes. Obviously, if you're a resident of CA or if you entered military service from CA, then these rules do not apply to you.
Obviously different states have different rules, but #3 comes from the SSCRA and supersedes any otherwise applicable state laws.
Brett