Taxes - what taxes?

All Mids are considered on active duty and receive an annual salary, which is distributed to them in a monthly paycheck and usually deposited directly into their Navy Federal Credit Union account. However, Mids are required to pay for their room, board, laundry, haircuts, etc. These monies are automatically deducted and are known as "funny money" because Mids never see it. Plebes owe the greatest amount of money--for their computer and uniforms. Their take-home pay is less than $50 monthly. By the end of Youngster year, most of these debts are paid, and Mids begin to see more money. Firsties net about  $250 a month. In January, Mids are issued a W-2 reporting their income, which is subject to state and federal income taxes.