Some states don't charge income tax on military retired pay. In all states, U.S. Department of Veterans Affairs disability payments are tax-free.
Some states don't charge income tax on military retired pay. In all states, U.S. Department of Veterans Affairs 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 the Defense Finance and Accounting Service or the Coast Guard Pay and Personnel Center for assistance.
States Without Personal Income Tax
Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming do not have a personal income tax. 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
- Pennsylvania
- Rhode Island
- South Carolina
- Utah (offset by a credit of 4.65% of the income)
- West Virginia
- Wisconsin
States With Special Military Retirement Pay Exemptions
The following states have special provisions for military or public pensions:
- Colorado: Military retirees under age 55 can exclude up to $15,000 of their retirement pay from their gross income; while all retirees ages 55-64 can exclude up to $20,000; and those 65 and over can exclude up to $24,000.
- Delaware: Up to $12,500 of military retirement excluded for retirees under age 60.
- Georgia: Military retirees under 62 years may exempt up to $17,500 of military retirement income plus an additional $17,500 for those with at least $17,500 of earned income. All Georgia retirees ages 62 to 64 may exempt up to $35,000. Those 65 and older may claim an exemption of up to $65,000.
- 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 $12,500 is tax-free; that amount increases to $20,000 at age 55.
- Montana: Starting in the 2024 tax year, residents who work in Montana may deduct up to 50% of military retirement or survivor pay for up to the first five years of meeting the eligibility requirements. For retirees in general, up to $5,060 is exempt if gross income is less than $42,140 for the 2023 tax year. Starting in the 2024 tax tear, taxpayers ages 65 and over will receive a $5,500 subtraction from their federal taxable income.
- New Mexico: Up to $30,000 of military retirement is tax-free.
- Oregon: If you had military service before Oct. 1, 1991, you may be able to deduct a portion of your retirement pay.
- Vermont: 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: A $20,000 exemption in the 2023 tax year; $30,000 in 2024, with the age requirement expiring in this tax year; and $40,000 in 2025 and beyond.
Related: State tax information for active duty members, retirees, and survivors.
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