Under what circumstance is a military service member's nonmilitary spouse's income not subject to California state tax?

The correct choice is that the military spouse's income is not subject to California state tax if the military spouse is a nonresident for the entire year. In this case, California's tax rules allow nonresidents to be exempt from state income tax on income earned outside of California. For military families, this is particularly important because service members may be stationed in multiple locations, resulting in complicated tax situations dependent on their residency status.

When a military service member is considered a nonresident in California, their nonmilitary spouse's income derived from sources outside of California is similarly exempt from state income tax. This scenario is defined under the Servicemembers Civil Relief Act (SCRA), which protects military personnel and their families from certain tax obligations based on their residency status.

The other choices either misinterpret tax laws pertaining to residency or place undue limitations on income levels that do not accurately reflect the laws governing military families. For example, living in a community property state refers to how income is divided rather than tax liabilities regarding a spouse's residency or military service status. Similarly, limiting the taxation of the nonmilitary spouse's income based merely on a threshold figure, like $10,000, does not align with California tax regulations that relate to residency and military