Yes, he should qualify for both his Navy retirement and National Guard income.
You are eligible to take a deduction if the income you report on your income tax return includes active or reserve military pay.
Also, if you are retired from the military or are the surviving spouse of a person who was in the military, you may be able to take this deduction if:
- You were at least 60 years of age by the end of the year;
- You were receiving military retirement or survivor's benefits during the year; AND
- The total benefits received as retirement income were reported on your federal return
Source: http://www.in.gov/dor/5863.htm#militaryservice