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|
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.
States That Don't Tax Military Retirement Pay
The following states do not tax retired military pay.
- New Jersey
- New York
- North Carolina
- North Dakota
- Oklahoma (beginning in 2022)
- Rhode Island (beginning in 2022)
- South Carolina (beginning in 2022)
- West Virginia
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.
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