Military Retirement Income Taxes by State – Which States Don’t Tax Military Retirement Pay?

A growing number of states either do not tax military retirement pay or offer special exemptions for military retirement pay or other forms of retirement pay, such as pensions or Social Security Benefits.
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Retired man reviews pension and other income

Which states don’t tax military retirement pay?

You may be surprised to learn that 33 states do not tax any of your military retirement pay, while 14 states offer special considerations for military retirement income or other pension plans. That leaves only four states that offer no special tax treatment of military pensions. Washington, D.C. is included in these facts.

Since I couldn’t find a website with detailed, state-by-state tax information on the whole income picture, I decided to create my own. Where applicable, I try to include links to the relevant state website, so you can double-check this information whenever you want. Keep in mind this information is subject to change based on state laws.

How State Taxes Impact Your Financial Planning

Understanding your taxes is a big part of financial planning, whether you are in the midst of your career or are reaching your retirement years. Which parts of your income and how much they are taxed can have a large impact on your financial planning and goals. That is why we put together this list of states that tax military retirement pay.

However, when you’re deciding where to live after leaving the military, taxes on military pensions are only one part of the equation. It’s also important to consider taxes on the rest of your income. Understanding the big picture can help your military retirement pay go further.

Many states have multiple income tax brackets based on taxable income. However, this article only contains the highest marginal individual tax bracket. For a true side-by-side comparison on tax liability, you might want to run the numbers yourself. 

If you are planning a more complex post-retirement career, such as owning your own business, you may want to sit down with a tax professional or fee-only financial planner for more detailed tax planning.

State Taxes on Military Retirement Pay – Full Table

The following table shows state income taxes on military retirement pay, including which states have no state income tax, which states exempt military pension income from state taxes, which states offer special tax treatments for military pensions and which states tax military retirement pay as ordinary income. The sections below the table offer further details on state income taxes.

StateMilitary Retirement Pay State Income Tax Info
AlabamaMilitary retirement pay exempt
AlaskaNo state income tax
ArizonaMilitary retirement pay exempt
ArkansasMilitary retirement pay exempt
CaliforniaNo special tax treatment of military retirement pay
ColoradoThe following military pension amounts can be excluded from Colorado income, based upon age: $20,000 (55-64); $24,000 (65+)
ConnecticutMilitary retirement pay exempt
DelawareThe following military pension amounts can be excluded from Delaware income, based upon age: $2,000 (Under 60); $12,500 (60+)
FloridaNo state income tax
GeorgiaNo special tax Treatment of military retirement pay
HawaiiMilitary retirement pay exempt
IdahoMilitary pensions are partially exempted according to the following table:
- Married filing jointly (must be either 65+ or 62+ and disabled): $47,934
- Single (must be either 65+ or 62+ and disabled): $31,956
IllinoisMilitary retirement pay exempt
IndianaFirst $6,250 is tax-free. 25% of the amount above this is tax-free in 2019, followed by an increase to 50% in 2020, 75% in 2021, and 100% in 2022 and subsequent years.
IowaMilitary retirement pay exempt
KansasMilitary retirement pay exempt
KentuckyMilitary pensions are fully exempt if you retired before 1997.
Personnel retiring after 1997 are subject to taxation to the extent their pension exceeds $41,110.
LouisianaMilitary retirement pay exempt
MaineMilitary retirement pay exempt
MarylandRetirees are able to exclude the first $5,000 ($15,000 if 55 and older) of their military pension benefits.
MassachusettsMilitary retirement pay exempt
MichiganMilitary retirement pay exempt
MinnesotaMilitary retirement pay exempt
MississippiMilitary retirement pay exempt
MissouriMilitary retirement pay exempt
MontanaNo special tax treatment of military retirement pay
NebraskaMilitary retirement pay exempt (starting 2022)
Special provisions apply for previous tax years. See Note under Nebraska for more details.
NevadaNo state income tax
New HampshireMilitary retirement pay exempt
New JerseyMilitary retirement pay exempt
New MexicoExemption may be allowed for low-income retirees.
New YorkMilitary retirement pay exempt
North CarolinaUp to $4,000 is exempt from North Carolina income tax.
North DakotaMilitary retirement pay exempt
OhioMilitary retirement pay exempt
OklahomaRetired service members may deduct the greater of $10,000 or 75% of their retirement income from Oklahoma income tax.
OregonYou may subtract your pension from Oregon income tax to the extent it was earned before October 1, 1991.
If all of your service was after October 1, 1991, your entire pension is taxable.
PennsylvaniaMilitary retirement pay exempt
Rhode IslandNo special tax treatment of military retirement pay
South CarolinaMilitary pensions can be deducted in the following amounts: Under 65: $17,500 per year; Age 65+: $30,000 per year
South DakotaNo state income tax
TennesseeNo state income tax on earnings or pensions
TexasNo state income tax
UtahUtah waives income taxes on the taxpayer's choice of Social Security Benefits or military retirement pay / Survivor Benefit Plan income. People over 65 may be eligible for a $450 (single) or $900 (married filing jointly) exclusion. However, income phaseouts apply.
VermontNo special tax Treatment of military retirement pay
VirginiaNo special tax treatment of military retirement pay
WashingtonNo state income tax
Washington D.C.Military retirees 62 and older are allowed to deduct up to $3,000 of their public pension.
West VirginiaThe first $2,000 in pension income can be excluded.
WisconsinMilitary retirement pay exempt
WyomingNo state income tax

States With No Income Tax

There are nine states that have no state income tax*.

  • Alaska
  • Florida
  • Nevada
  • New Hampshire (institutes tax on interest and dividends)*
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

* New Hampshire taxes residents on interest and dividends but does not tax regular earned income or pension income. Taxes on interest and dividends represent a small amount of taxes for most taxpayers in these states.

States That Don’t Tax Military Retirement Pay

The following 24 states have a state income tax, but exempt military retirement pay and/or pension income from state income taxes. See the next section for more details regarding each state’s highest marginal tax bracket and special tax treatment for military retirement income.

  • Alabama
  • Arizona (effective Jan. 1, 2021)
  • Arkansas
  • Connecticut
  • Hawaii
  • Illinois
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nebraska (effective Jan. 1, 2022)
  • New Jersey
  • New York
  • North Dakota
  • Ohio
  • Pennsylvania
  • Utah (effective Jan. 1, 2021)
  • West Virginia
  • Wisconsin

States Offering Partial Exemptions on Military Retirement Income

The following 16 states have partial income tax exemptions for military retirement pay:

  • Arizona
  • Colorado
  • Delaware
  • Georgia
  • Idaho
  • Indiana
  • Kentucky
  • Maryland
  • Montana
  • Nebraska (through 2021; military retirement pay will be tax-exempt beginning Jan. 1, 2022).
  • New Mexico
  • North Carolina
  • Oklahoma
  • Oregon
  • Rhode Island
  • South Carolina

States That Fully Tax Military Retirement Pay

The following states offer no special tax treatment for military retirement pensions:

  • California
  • Vermont
  • Virginia
  • Washington, D.C.

Highest Marginal Tax Rates by State and Military Pension Tax Rates

This section covers the highest state income tax bracket, as well as more details regarding taxation on military retirement pay. 

You will note that several of the states that offer special considerations for military retirement pay or other pensions often do so by age, usually somewhere in the age 60-65 range, depending on the state. 

Age 60 is the normal age for receiving Guard and Reserve retirement benefits, though some members do qualify to receive retirement pay early based on deployments. You can use this information to help plan your post-military career or your post-military retirement plans.

Alabama

  • Highest marginal tax rate: 5% for income above $3,000 (individuals) or $6,000 (married filing jointly).
  • Exempt from taxes on military retirement pay.

Alaska

Arizona

  • Highest marginal tax rate: 4.54% for income above $150,000 (individuals) or $300,000 (married filing jointly).
  • Military retirement pay is exempt beginning Jan. 1, 2021
  • For prior tax years, up to $3,500 in military retirement pay can be exempted from taxable income.

Arkansas

  • Highest marginal tax rate: 7.0% (for income above $35,300 – as of 2015).
  • No taxes on military retirement pay. Up to $6,000 in other retirement pensions can be exempted from taxable income.

California

  • Highest marginal tax rate: 13.3% for income above $537,498 (single) and $1,074,996 (married filing jointly).
  • Military pension is fully taxable.

Colorado

  • Highest marginal tax rate: 4.63% for all income, regardless of filing status.
  • The following military pension amounts can be excluded from Colorado income, based upon age:
    • $20,000 (55-64)
    • $24,000 (65+)

Connecticut

  • Highest marginal tax rate: 6.99% for income above $500,000 (single) and $1,000,000 (married filing jointly).
  • Military pension is fully exempt from taxes.

Delaware

  • Highest marginal tax rate: 6.6% for income above $60,000 regardless of status (more info).
  • The following military pension amounts can be excluded from Delaware income, based on age:
    • $2,000 (under 60)
    • $12,500 (60+)

Florida

  • No state income tax.
  • No taxes on military retirement pay.

Georgia

  • Highest marginal tax rate: 6.0% for income above $7,000 (single) or $10,000 (married filing jointly).
  • Military pensions are fully taxable.

Hawaii

  • Highest marginal tax rate: 11.0% for income above $200,000 (single) or $400,000 (married filing jointly).
  • Military pensions are fully exempt.

Idaho

  • Highest marginal tax rate: 7.4% for income above $10,905 (single) or $21,810 (married filing jointly).
  • Military pensions are partially exempted according to the following table:
    • Married filing jointly (must be either 65+ or 62+ and disabled): $47,934
    • Single (must be either 65+ or 62+ and disabled): $31,956

Illinois

  • Highest marginal tax rate: 4.95% for all taxpayers .
  • Military pensions are fully exempt.

Indiana

  • Highest marginal tax rate: 3.3% for all taxpayers.
  • Military retirees are allowed to deduct up to $6,250 of their pension.
  • The state of Indiana will phase out income taxes on military retirement pay over a four-year period, starting with 2019 taxes. In 2019, 25% of the amount above $6,250 will be tax-exempt, followed by 50% in 2020, 75% in 2021 and the full amount in 2022.
  • This exemption does not extend to retirees of the U.S. Public Health Service or the National Atmospheric and Oceanic Administration.

Iowa

  • Highest marginal tax rate: 8.98% for income above $95,600, regardless of filing status.
  • Military pensions are fully exempt.

Kansas

  • Highest marginal tax rate: 4.6% for income above $15,000 (single) or $30,000 (married filing jointly).
  • Military pensions are fully exempt.

Kentucky

  • Highest marginal tax rate: 6% for income above $75,000 regardless of status.
  • Military pensions are fully exempt if you retired before 1997. Personnel retiring after 1997 are subject to taxation to the extent their pension exceeds $41,110.

Louisiana

  • Highest marginal tax rate: 6% for income above $50,000 (single) or $100,000 (married filing jointly).
  • Military pension benefits may be excluded from taxable income.

Maine

  • Highest marginal tax rate: 7.95% for income above $20,900 (single) or $41,850 (married filing jointly).
  • Military pension benefits are exempt from Maine income tax.

Maryland

  • Highest marginal tax rate: 5.75% for income above $250,000 (single) or $300,000 (married filing jointly).
  • Retirees are able to exclude the first $5,000 ($15,000 if 55 or older) of their military pension benefits.

Massachusetts

  • Highest marginal tax rate: 5.1% for all income, regardless of tax bracket or status.
  • Military pensions are exempt from Massachusetts income tax.

Michigan

Minnesota

  • Highest marginal tax rate: 9.85% for income above $154,950 (single) or $258,261 (married filing jointly).
  • Military pensions are exempt from Minnesota income tax.

Mississippi

  • Highest marginal tax rate: 5.0% for income above $10,000 regardless of status.
  • Military pensions are exempt from Mississippi income tax.

Missouri

Montana

  • Highest marginal tax rate: 6.9% for income above $17,100 regardless of status.
  • Military pensions are subject to Montana state tax.

Nebraska

  • Highest marginal tax rate: 6.84% for income above $29,460 (single) or $58,920 (married filing jointly).
  • Military retirement pay will be fully tax exempt, beginning Jan. 1, 2022. 
  • For prior tax years, military retirees who retire after July 18, 2012, are allowed to exclude pension income according to one of the following two schedules:

An individual must make the election on or after July 18, 2014, and within two years after his or her retirement from the uniformed services, even if he or she does not begin receiving military retirement benefits immediately upon retirement. The individual may elect:

  • Option 1: To exclude 40% of his or her military retirement benefit income for seven consecutive taxable years, beginning with the year in which the election is made
  • Option 2: To exclude 15% of his or her military retirement benefit income for all taxable years, beginning with the year in which he or she turns 67 years of age

Nevada

  • No state income tax.
  • No taxes on military retirement pay.

New Hampshire

New Jersey

  • Highest marginal tax rate: 8.97% regardless of filing status.
  • No taxes on military retirement pay in New Jersey.

New Mexico

  • Highest marginal tax rate: 4.9% for income above $16,000 (single) or $24,000 (married filing jointly).
  • Exemption may be allowed for low-income retirees.

New York

  • Highest marginal tax rate: 8.82% for income above $1062,650 (single) or $2,125,450 (married filing jointly).
  • No taxes on military retirement income in New York.

North Carolina

  • Highest marginal tax rate: 5.85% for all taxpayers, regardless of status.
  • Military retirees with five years of creditable service before Aug. 12, 1989, are exempt from state income taxes on military retirement pay or military survivors benefits.
  • Military retirees without five years of military service before Aug. 12, 1989, are exempt from up to $4,000 ($8,000 for joint tax returns) on military retirement pay or military survivors benefits.
  • More about North Carolina income tax for military service members.

North Dakota

  • Highest marginal tax rate: 2.9% for income above $413,000 (single) or $420,000 (married filing jointly).
  • Military pensions are fully exempt, starting in the 2019 tax year.
  • This exemption does not extend to retirees of the U.S. Public Health Service or the National Atmospheric and Oceanic Administration.

Ohio

  • Highest marginal tax rate: 4.997% for income above $208,500 regardless of status.
  • Military pensions are fully exempt from Ohio income tax.

Oklahoma

  • Highest marginal tax rate: 5.25% for income above $15,000 (single) or $27,600 (married filing jointly).
  • Retired service members may deduct the greater of $10,000 or 75% of their retirement income from Oklahoma income tax.

Oregon

  • Highest marginal tax rate: 9.9% for income above $125,000 (single) or $250,000 (married filing jointly).
  • You may subtract your pension from Oregon income tax to the extent it was earned before Oct. 1, 1991. If all of your service was after Oct. 1, 1991, your entire pension is taxable.

Pennsylvania

  • Highest marginal tax rate: 3.07% for all income regardless of filing status.
  • Pennsylvania does not tax military pension income.

Rhode Island

  • Highest marginal tax rate: 5.99% for income above $137,650 regardless of filing status.
  • Military pensions are fully taxable.

South Carolina

  • Highest marginal tax rate: 7.0% for income above $14,700 (single) or $15,400 (married filing jointly).
  • Military pensions can be deducted in the following amounts:
    • Under 65: $17,500 per year
    • Age 65+: $30,000 per year

South Dakota

  • No state income tax.
  • No taxes on military retirement pay.

Tennessee

  • No state income tax.
  • No taxes on military retirement pay.

Texas

  • No state income tax.
  • No taxes on military retirement pay.

Utah

  • Highest marginal tax rate: 4.95% for all income regardless of filing status.
  • Effective Jan. 1, 2021, Utah offers an income tax exemption from Social Security benefits, military retirement pay or military survivor benefit plan pay. Beneficiaries who are eligible for both must choose which income to waive for income tax purposes. People over 65 may be eligible for a $450 (single) or $900 (married filing jointly) exclusion. However, income phaseouts apply.

Vermont

  • Highest marginal tax rate: 8.95% for income above $411,500 regardless of filing status.
  • Military pensions are fully taxable.

Virginia

  • Highest marginal tax rate: 5.75% for income above $17,000 regardless of filing status.
  • Military pensions are fully taxable.

Washington

  • No state income tax.
  • No taxes on military retirement pay.

Washington, D.C.

  • Highest marginal tax rate: 8.95% for income above $1,000,000 .
  • Military retirees 62 and older are allowed to deduct up to $3,000 of their public pension. Private pensions are not exempt from deductions.

West Virginia

  • Highest marginal tax rate: 6.5% for income above $30,000 (married filing separately) or $60,000 (single or married filing jointly).
  • The first $2,000 in pension income can be excluded.

Wisconsin

  • Highest marginal tax rate: 7.65% for income above $244,750 (single) or $326,330 (married filing jointly).
  • Military pensions are fully exempt.

Wyoming

  • No state income tax.
  • No taxes on military retirement pay.

Other Notes About Military Retirement Pay and Taxes

Military retirees pay federal taxes on retirement pay. However, there are situations that may impact your retirement pay. A common one is receiving VA disability compensation due to a service-connected disability rating. 

VA disability compensation is a non-taxable benefit. However, receiving disability compensation can impact your retirement pay. Military retirees who have a service-connected disability rating of 50% or higher receive concurrent receipt. This has no impact on military retirement pay.

Those with a service-connected disability rating of 40% or less are ineligible for concurrent receipt and have their military pension reduced by the amount of disability compensation they receive from the VA. The amount from the VA is non-taxable. 

The net effect is to receive the same amount of income. However, the portion from the VA is tax-exempt, which lowers your effective taxable income. There may be exceptions for retirees receiving combat-related special compensation, or CRSC.

I hope this article helps you to find the tax information you need as you look to make your relocation decision. Just remember, taxes are only a small factor in your relocation decision. You should take a look at all the different priorities in your life and make the relocation decision that best suits you.

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About Forrest Baumhover

Forrest Baumhover is a Certified Financial Planner™ and financial planner with Lawrence Financial Planning, a fee-only financial services firm. As a retired naval officer, Forrest helps veterans, transitioning servicemembers and their families address the financial challenges of post-military life so they can achieve financial independence and spend more time doing the things they love.

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  1. Damion King says

    USAR SM here. HOR is IL. Since joining the mililtary back in 2012, IL has never taxed my military income. You may want to update that on this list. I was AD 2012 to 2017, then Reserves 2017 to current. Again, IL has never taken out state income tax from my military pay.

    • Ryan Guina says

      Thank you, Damion. Some states, including IL, do not take military pay. However, this article is focused on military retirement pay. We don’t have an article that covers which states tax military income from those who are still serving. Thanks!

  2. Neil O'Connor says

    I retired to NY in 2016 with a Marine reserve pension starting in 2015. Effective tax year 2018, only the first $20,000 remains free from NY State taxes. (“annuity income exclusion” Unless I’m doing my taxes wrong — I use H&R Block TaxCut.) Regardless, I can’t find a clear answer in NY State tax pubs; ref: Publication 361, and Publication 36

    • Ryan Guina says

      Hello Neil, page 7 of Publication 361 states the following, “Military pension payments received by retired military personnel or their
      beneficiaries are totally exempt from New York State tax.”

      So it appears to me as though your pay should be tax-exempt at the state level. I would speak with a tax professional in your state or contact the state tax authority for more information.

  3. Bonnie St Cyr says

    My husband retired from the Army. Residing in MD. He passed away in Jan. of this year. I am receiving SBP payments. The payment statement shows no MD state tax witholdings. Does MD tax SBP?

    • Ryan Guina says

      Hello Bonnie, I am sorry for your loss. Most states treat Survivor Benefit Pay as military retirement pay. So in the case of MD, they tax military retirement pay at the following schedule (as of 2019) – “Retirees are able to exclude the first $5,000 ($15,000 if 55 and older) of their military pension benefits.”

      You can always contact DFAS or a tax professional for more information. I wish you the best.

  4. Angie Barber says

    In contacting NC on July 8 2019 the $4000 exclusion is no longer valid for those not meeting the 5 year rule for the Bailey Settlement. Their instructions for line 10 have been updated to remove that amount.

  5. Bob Foessett says

    I understand WV effective Jan 2018, does NOT tax military retirement pay. I read the story when the Governor signed it…many military retirees are moving to the panhandle counties near DC where they can use military facilities too. Please check out. Thanks. RF, Lt Col, USAF (Ret)

  6. Van Bell says

    Thank you for taking the time to put all this information together. Especially with the additional updates you have been making. Very much appreciated.

  7. Mike Barbour says

    Ryan,
    The info in the Maryland breakout is correct; however, the infi in the table is dated. Thanks for the post – it’s very informative.

  8. Ana M Hambright says

    My husband retired with 20 years in the Navy. Residing in Texas. My question he passed away November 28, 2018. How do I check if I am due any back taxes paid. I do t know if he had CRSC or CRDC. What or can I get information on this even though he passed away in 2018. Just trying to check my benefits.

    • Ryan Guina says

      Thank you for the update, Kevin. I just verified with the Maryland tax website. It is $5,000 for those under age 55, and $15,000 for those age 55 and up. We have updated the article accordingly. Thank you!

  9. Lee says

    You’re slightly incorrect on North Carolina . According to Bailey vs North Carolina, if you had 5 years of creditable service prior to 8/12/1989, your military retirement is tax free. Otherwise the $4000 limit is correct.

      • Ryan Guina says

        Thank you for the update, Sean. You are correct, that change was made as of the 2018 tax year. We have updated this article accordingly. Thank you!

  10. Thomas Barry says

    Someone told me that if you retired from the military and the VA rated you as 100% disabled then not only is your VA disability check not subject to Federal Income Tax but your Military Retirement Check is exempted from Federal Income Tax too. Does anyone know if this is correct?

    • Ryan Guina says

      Hello Thomas, no I have not heard of this. VA disability compensation is always exempt from federal taxes. Military retirement pay is generally always taxed at the federal level. However, military retirees who are eligible for Combat Related Special Compensation, or CRSC, may be eligible to have a portion of their military retirement pay exempt from federal taxes. CRSC must be applied for through the military retiree’s branch of service.

  11. MK Clark says

    Pa’s always been a haven for retired military members. Besides retirement pay tax exempt, retirees are well taken care of. My parents for one settled at Alden Place in Lebanon Pa and has since received one of the best medical treatment from Lebanon VA Medical Center, which is quite famous among veterans in the country.

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