Military Retirement and State Income Tax

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Some states don't charge income tax on military retired pay. In all states, VA & Social Security disability payments are tax-free.

If you have issues with retired pay and state income tax, including changing your withholding amount, you can always contact DFAS for assistance.

You can contact DFAS at:

Defense Finance and Accounting Service
US Military Retirement Pay
8899 E 56 St
Indianapolis, IN 46249-1200
 
Phone: 800-321-1080

States Without Personal Income Tax

Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not have a personal income tax. Two others, New Hampshire and Tennessee, tax only dividend and interest income.

Related: State tax information for active duty members, retirees, and survivors.

States That Don't Tax Military Retirement Pay

The following states do not tax retired military pay.

  • Alabama
  • Arizona
  • Arkansas
  • Connecticut
  • Hawaii
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi 
  • Missouri
  • Nebraska
  • New Jersey
  • New York
  • North Carolina
  • North Dakota
  • Ohio
  • Oklahoma (beginning in 2022)
  • Pennsylvania
  • Rhode Island (beginning in 2022)
  • South Carolina (beginning in 2022)
  • Utah
  • West Virginia
  • Wisconsin

States With Special Military Retirement Pay Exemptions

The following states have special provisions for military or public pensions:

  • Colorado - Military retirees ages under age 55 can exclude up to $10,000 of their retirement pay from their gross income; those ages 55 - 64 can exclude up to $20,000 and those 65 and over can exclude up to $24,000.
  • Delaware - Up to $2,000 of military retirement excluded for individuals under age 60; $12,500 if 60 or older.
  • Georgia - Taxpayers over 62 or permanently disabled may be eligible for an exclusion of retired pay from gross taxable income.
  • Idaho - Tax-free for retirees 65 and older, or disabled retirees 62 or older.
  • Kentucky - Up to $31,110 is tax-free, you may be able to exclude more in some situations.
  • Maryland - The first $5,000 is tax-free, that amount increases to $15,000 at age 55.
  • Montana - Up to $4,640 is exempt if gross income is less than $38,660
  • New Mexico - Beginning in 2022, up to $10,000 of military retirement is tax-free. That amount increases to $20,000 in 2023, and to $30,000 after that.
  • Oregon - If you had military service before Oct. 1, 1991 you may be able to deduct a portion of your retirement pay. 
  • Vermont - Beginning in 2022, up to $10,000 in retirement income is tax-free for those with a gross income less than $50,000 for single filers or $65,000 for joint filers.
  • Virginia - In 2022, up to $10,000 in retirement pay is tax-free for retirees 55 and older. That amount increases by $10,000 each year until 2025, when up to $40,000 is deductible.

Related: State tax information for active duty members, retirees, and survivors.

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