States That Don’t Tax Military Retirement Pay

Posted by on March 18, 2013
Last modified:
Military veterans should consider retiring to one of these states if they want to lighten their tax burden

Military veterans should consider retiring to one of these states if they want to lighten their tax burden

Many people intend to retire in a state where they can get the most bang for their buck, and military veterans are no exception. For them, this often involves finding a state that doesn’t tax military retirement pay, or else offers a generous exemption.

In the lists below, you’ll find a  breakdown of how military retirement pay is treated by the tax codes of the various states. In those states not included, military retirement pay is fully taxable.

States with No Income Tax

At the top of the list are the nine states that have no state income tax at all. By default, military retirement pay is completely exempt from tax. These states are:

  • Alaska
  • Florida
  • Nevada
  • New Hampshire
  • South Dakota
  • Tennessee
  • Texas
  • Washington
  • Wyoming

Note: New Hampshire and Tennessee both tax interest and dividends. For most taxpayers, however, this would constitute a relatively small portion of total income.

States That Exempt Military Retirement Pay

These states do have an income tax, but they exempt military retirement pay entirely. These states are:

  • Alabama
  • Connecticut
  • Hawaii
  • Illinois
  • Kansas
  • Louisiana
  • Massachusetts
  • Michigan
  • Mississippi
  • New Jersey
  • New York
  • Ohio
  • Pennsylvania
  • Wisconsin

The Special Cases

Finally there are several states that do not offer a full exemption of military retirement pay but do offer some form of preferential treatment.

  • Arizona – Military retirement pay is not exempt, but you can subtract up to $2,500 for military pensions in arriving at Arizona taxable income.
  • Arkansas – Retired military personnel are entitled to a $6,000 exemption.
  • Colorado – Persons who were 55-64 years of age as of December 31 may exclude up to $20,000 of their military retirement benefits received during the calendar year. Persons who were 65 years of age or older as of December 31, may exclude up to $24,000 of their military retirement benefits received during the calendar year.
  • Delaware – Individuals under the age of 60 can exclude up to $2,000 of military retirement pay and individuals 60 and over can exclude up to $12,500.
  • Idaho – Retirement benefits to a retired member of the military 65 or older, or disabled and age 62 or older are deductible. The amount deducted must be reduced by retirement benefits paid under the Federal Social Security Act or the Tier 1 Federal Railroad Retirement Act. The maximum amounts that may be deducted are $41,814 for married filing jointly and $27,876 for single. The amount varies from year to year.
  • Indiana – You can deduct the actual amount of retirement pay received or $5,000, whichever is less, if you meet certain conditions.
  • Iowa – Up to $10,000 (joint returns), and up to $5,000 (other returns) of military retired pay and SBP benefits may be excluded for those who are 55 years old and older, disabled, and for surviving spouses.
  • Kentucky – If you retired in 1997 or before, all of your retired military pay is exempt from tax. If you retired after 1997, your pay is subject to state tax if it exceeds $41,110.
  • Maryland – Military retirees are exempt from Maryland income tax on the first $5,000 of their retirement income. In addition, military retirees who are over the age of 65, totally disabled, or who have a spouse who is totally disabled, receive an additional subtraction.
  • Missouri – For the tax year beginning January 1, 2012, 45% of a military pension income will be exempt from MO state tax. This tax deduction will increase 15% annually until January 1, 2016 when all military pension income will be tax free.
  • Montana – The first $3,600.00 of retired military pay is exempt from income tax.
  • New Mexico – The maximum exemption is $2,500. To qualify, the amount on line 7 of the state income tax form must be equal to or less than $36,667 (single), $27,500 (married filing separately), or $55,000 (married filing jointly). A deduction also applies for those 65 and older if your adjusted gross income is not over $51,000 for a joint return, $28,500 for a single taxpayer, or $25,500 for a married taxpayer filing separately.
  • North CarolinaSee the new Bailey decision concerning federal, state and local retirement benefits.
  • Oklahoma – Each individual may exclude 75% of their retirement benefits or $10,000 (whichever is greater), but not to exceed the amount included in the federal adjusted gross income.
  • Oregon – If you receive military retirement pay, you may qualify for a federal pension subtraction. If you are a special-case Oregon resident, your pension remains taxable as Oregon-source income.
  • South Carolina – Any person retired from the uniformed services with at least 20 years of active duty is allowed an exemption from SC income tax of up to $3,000 until age 65. At age 65 $10,000 of retirement pay is exempt.
  • Utah – Up to $4,800 of qualified retirement is waived until age 65.  At age 65 or older, $7,500 is waived.
  • West Virginia – An individual, regardless of age, may deduct up to $2,000 of benefits received from military retirement.

While you’re planning ahead for the future, don’t forget about filing this year’s state and federal taxes. You can do that with RapidTax.

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Updated for 2015 tax year.



This entry was posted on at 3:25 pm and is filed under State Taxes | Blog.

146 Responses to “States That Don’t Tax Military Retirement Pay”

  1. David Beemer says:

    You forgot NC!

    • Tax Advisor says:

      Hi David,

      North Carolina is included under Special Cases, but still a good place for vets to retire.

      • Cyndi says:

        How is NC a good place for Vets? My husband Are contemplating not retiring to NC due to changes in their tax laws. He as served sine Sep, 1985 and falls 1 year shot of the Aug, 1989 cut off. I will continue to work full time while my husband is retired. Can you please show me how this it will benefit us to retire in NC. Other states we are considering include GA or FL.

        • Tax Advisor says:

          Hi Cyndi,
          North Carolina has special military retirement pay exemptions. NC allows a full tax exemption for retirees with five years of service as of August 12, 1989; otherwise a deduction of up to $4000 ($8000 for joint filers).

          • Cyndi says:

            Thank you for your response.

            But that means that out of $100K we would only be taxed on $92K, correct? My issue is that is a much lower vantage point than the previously tax exempt status offered in NC for military retirees.

            I’m really disappointed with the changes. I was trying to appreciate your earlier comments, I’m failing to find the benefit of this new tax system. Are there other tax benefits that might offer pull for retiree in NC?

            Thanks in advance.


          • Billy says:

            I’ve been retired from the Navy since 1996. My own Personal Opinion is that any person who has served this country for the Full 20 years (Grandfathered) or if they took an early retirement on a case by case basis (for extenuating circumstances such as the Member retaining Custody of Minor Children because of Divorce. Having No One willing to watch or take care of the Minor Children). Should be Fully Tax Exempt in all 50 states. This should be done for the Main Reason that the State where the Military Retiree retires to should show them Gratitude for their service. Considering that approximately only 7% of this Nation answers the Call to Serve. This should also apply to Married Military Couples as well. Considering about 85% of Military Marriages end in Divorce.

            Those Individuals receiving Medical Compensation due to Injury while in the Service should also be Tax Exempt or continue to be Tax Exempt.

          • David says:

            I think they got rid of the 4000 dollar exemption under the Bailey bill starting for tax year 2014.

          • Mike says:

            Not any more. All military who are not excluded under the “Bailey” law are now paying taxes on 100% of military retirement pay. They just changed that in ’15. Thanks NC! Just when you thought it couldn’t get any worse……

          • Tax Advisor says:

            Hi Mike,

            Thanks for bringing this to my attention. I’ve included a link to more information about the Bailey law above, under “The Special Cases”.

        • Michael says:

          Move to FL. Problem sovled. No state income tax on any income no matter where it comes from. You don’t even file state tax forms!

          • John says:

            Problem solved? I don’t think so. You may not have state income taxes, but your military retirement pay is taxed at the federal level.

        • GLENN SMITH says:

          What is so special between 1985 thru 1989 regarding retirement? I served through these years and do not see anything so great. If there is something I missed between these years will it effect my being VA rated: TDIU 100% Disabled SC and a military retiree regarding CRDP?

      • April says:

        Update! NC no longer allows for the $4,000 exemption. It’s not looking good for us in NC.

    • Martin says:

      too bad about NC. I missed the deadline by 2 weeks. that makes Tennessee a better choice, and Kentucky a close second.

      • James says:

        fully taxed—–1096———-2875————–5750
        all exempt——0—————–0——————–0——

        Excluding exemptions (as well as the fact your taxable income on va form 760 carries over from federal AGI which has already deducted IRA contributions, tuition, HSA contributions), I don’t really see any issues with North Carolinas treatment. We all have to pay taxes…..the problem is not that veterans are fully exempt…..its that tax rates are so high because we’ve allowed the government to grow way out of control.

        As far as Tennessee being a better choice. If your planning on working your going to find Tennessee has very little opportunity and HIGH sales taxes. At least North Carolina takes good care of its infrastructure with those taxes.

        Food for thought. You mix the energy credits of solar panels/installation from the Federal and North Carolina tax codes (No other state outside the good ole south can match NC), and the governments are reducing your tax to pay around half of your panel/installation price. There’s not a much better investment in retirement than cutting your electricity bills to less than half. Note-the NC deduction is broken up over 4-5 tax years

        No bias here. Navy veteran. Tennessee home of family. North Carolina home of record. Now living in Virginia.

    • Pamela Rainey says:

      My husband joined the service in 1982. He is retired and we are looking for our final home. We are thinking about NC as our home. Do the law for tax exempt apply to him even though he joined in Ohio?

      • Al says:


        If I joined the military in January 1984, but it was the delayed entry program, and did not start active duty till 14 August 1984; do I still meet the 12 August rule?
        I know that 14 comes after 12 (and 2 days short), but there were dates for MEPS and other required military meetings and even the Army showes my Pay Entry Date as January.
        Thank you.

        • Mike says:

          Al, I’m in the same boat as you…. Date of Entry Into Military Service is July 84 but didn’t start Officer Candidate School for two weeks (14 Aug 84) and got commissioned in Nov 84. My only date before the 12 Aug is the Pay Entry Date in July. Looks like no one responded to your question that I can see here. How did it all turn out for you? Did you get any clarification on this issue? This may be a show stopper for NC if I have to pay taxes on my pension.


      • M Buchanan says:


        If he retired from the active military, it will not matter where he joined since it is a federal retirement check. He just needs to meet the 5 years service prior to 1989. I am not sure about retirement from National Guard.

      • K McD says:

        Please correct your statement as M Buchanan comments correctly. Military retirement pay does not come from a state, that is not part of the calculations.

        As for calculating time in service, your official date will be on your DD214. Some delayed entry used to count.

        It matters what state of residence you have on your tax form for the year you are filing. There is a certain amount of the year you have to live in the state to claim it as your tax filing state. Where you joined the service used to matter so they could pay you to return there upon discharge (or equivalent).

        And if you are getting $40K retirement pay, you would have to figure out if paying taxes on that in NC yet going with solar panels outweighs no tax on that in FL.

        Sorry, James, we all have to pay taxes but some of us will calculate the least we can pay so we can actually live on our retirement pay. I like NC, but if I were moving, I’d go to TN if I wanted the same weather or FL if I wanted the coast, then visit NC.

      • REY FARINAS says:

        I joined in Aug 1980 and had been retired in NC since 2000. Here’s what I had experienced here. When you prepare your income tax return, your military income will be exempted under the the Bailey Settlement if you were vested as of August 12, 1989.

        • rick says:

          Came back to NC (joined in 1977) got out in 1981 for 3 months then back in till 2002….at least its better in NC than before when there was NO exceptions.. i agree no one should take military retirement up till say 50K …we’ve earned it my last 2 yrs in the railroad (2nd job) i was in nebraska geez talk about a taxing :-)) state.. 300 $ a month for state tax taken out of my military retirement alone and they asked me why i was leaving….

          • Cara says:

            We are considering leaving Nebraska for Nevada for that very reason. Nevada has no state income tax , doesn’t have miserable winters and property taxes are far less than Nebraska, which should just call itself NeTAXA, that’s all they do here is tax,tax, tax and they don’t exclude veterans who honorably served for 20 years! NC was nice, but still more taxing than Nevada will be.

    • Paul says:

      One has to note that up to $20k is non taxable (state filing). This adjustment has been in effect for quite sometime now. Plus the $2000 mentioned. But one must remember West Virginia has no active-duty bases.

  2. John says:

    What about GA? I’m in the Army and thinking about retiring in GA.

    • Tax Advisor says:

      Hi John,

      As far as I’m aware, there’s no special allowance made for military retirement pay. However, Georgia does have a fairly generous retirement income exclusion that applies to everyone (as opposed to members of the military specifically). For the 2012 tax year, the maximum retirement income exclusion is $35,000 for taxpayers who are (A) 62-64 years old, or (B) less than 62 and permanently disabled. The retirement exclusion is $65,000 if the taxpayer is 65 or older.

      • Tricia says:

        Hello –

        My husband is retired Navy; served 22 years and gets a retirement check. He is also 48 yrs old and works full-time as a civilian. Unfortunately, because he is not 62 or older – his retirement income is fully taxed at our tax rate.
        Most of GA’s benefits regarding taxes benefits individuals 62 and older.
        Just an FYI

  3. Glenn says:

    On top of military tax exemption, are there other “state financial benefits” that some states offer over others that are military tax exempt?

    • Tax Advisor says:

      Hi Glenn,

      Yes, pretty much every state has a unique tax situation that could offer you more benefit depending on your personal tax situation. You’ll have to do some investigating to figure out which state is best for you.

  4. Tony says:

    I currently am a New York resident, active duty and ready to retire. I have a house in N.C. and looking to retire there. Question, will my military retirement pay be exempt still if I live in N.C. and I’m still considered a New York resident? Also what source can I use to look up other benefits to living in NC as a military retiree? Thank you.

  5. Lee Doyle says:

    I am 71 years old and have a military retired income of 36,000 yearly, 25,000 social security and 13,000 civil service. I own a home in Arizona. Will I be taxed on all of my retirement income
    Thank You
    Lee Doyle

  6. Beth says:

    My husband is 56 and on military disability since 2002. He receives a 1099r with code 3 disability in the code box. Is the income fully taxable to Louisiana state ? It is not his retirement but his disability that he receives.
    Some one told me it goes on 4 as retirement income and someone said 49E. ??????
    Thank you

    • Tax Advisor says:

      Hi Beth,
      According to the IRS, you do not include military and government disability pensions as income. This means, the disability is tax-free. There is more information from the IRS website. Scroll down to the section titled “Military and Government Disability Pensions” after going to the IRS website; The state of Louisiana follows these same guidelines.

  7. Debby DuBay says:

    I’m retired from active duty on full pension. Does the state of VT offer any military tax exemptions? Thank you!

  8. Tight says:

    You all seem to be missing the point here! The tax rate is a multiple of the income tables !

    Ru all really that stupid?

  9. Mark says:

    My tax accountant has never prepared a military retired tax return before. She seems to think that I will have to pay a penalty for some kind of (under 59 1/2 age) rule. I’m confused on what she is talking about. Can you please advise.Thank you.

    • Tax Advisor says:

      Hi Mark,
      For retirement plans like an IRA, you must wait until your 59 and a half to withdrawal from the retirement account without having penalties assessed. If you withdrawal from your IRA retirement plan before this age of 59 and a half, you are subject to a 10% penalty on top of your ordinary income taxes. If this is your case, it sounds like your accountant is correct.

      It’s good to know a few tips. First, there are some exceptions to this 10% penalty that are worth investigating on the IRS website. Second, if you retired early and withdraw IRA funds before 59 and half, there is a plan called SEPP which allows you to set up a plan to avoid the 10% penalty. It’s set up through the IRS and is based off of your current age, your life expectancy and something titled the “Applicable Federal Mid-term Rate”. They (the IRS) will tell you an exact amount (without a penny over or under) of how much you can withdraw each year without incurring a penalty. The link to this information on the IRS website is as follows;

      How old are you Mark? In the big picture, if you are over 59 and half, you should not be penalized for withdrawing from your retirement and should definitely point this out to your accountant. Also, when filing your taxes in the future, our accountants can help you with any military related tax questions you have.
      Best of luck!!

  10. Mark says:

    Hi Tax Advisor;

    Thank you for the information. I am 46 with no other retirement plans. The information you provided was exactly what I had already informed my accountant of. The fact that I only get a military retirement check and C & P, with no other types of retirement plans such as IRA, Roth, or 401k, I’m understanding (according to your response) the 59 and a half rule does not apply in my situation.

    Thanks again!

  11. Kristin says:

    Can you expand on the SC special case of $3K and $10K? Does that mean $3K more or less? If my ret pay is say $1700/mo give me an example with my specifics.

    • Tax Advisor says:

      Hi Kristin,
      Sure… So if you are receiving military retirement from 20 or more years of active duty and are under the age of 65, then when you go to file your taxes, you may exempt $3000 of your retirement income, meaning $3000 won’t be taxed. That means if it already was taxed, after listing it on your tax return as an exemption, you’ll most likely receive a tax refund.
      The same applies to $10,000 of your military retirement income if you are over the age of 65. That means $10,000 of it won’t be taxed.

  12. Dennis says:

    I am considering Tennessee. You identify them as not having a state income tax, but their department of revenue site says they have had an income tax since 1929.

    • Tax Advisor says:

      Hi Dennis,
      In the big picture, there’s no state income tax in Tennessee. However, the state does levy a tax on interest and dividend income over $1,250 (called the Hall Tax). So yes they do collect income taxes, but not on income other than interests and dividends.

  13. Angela says:

    I am a Texas resident but am on active duty stationed in SC. I want to retire but will not stay in SC, I am moving to Florida after I retire. Will I be charged SC taxes on my retirement if I retire in SC and then move to Florida?

    • Tax Advisor says:

      Hi Angela,
      If you are a Texas resident you will not be taxed for your retirement. If you become a resident of SC then you will be taxed for your retirement income received.

  14. heath says:

    I recieve military retirement and VA disability (100%) is it taxed in Florida. Under 65

  15. James says:

    I am a NC resident and fall under Special Cases. However, I have been paying Federal Income Tax. How do I have this discontinued and am I entitled to a refund.

    • Tax Advisor says:

      There’s no way in avoiding federal taxes, unless you falls below the IRS filing threshold for your age and filing status. The IRS website has a complete list of who does and who doesn’t have to pay federal taxes.

  16. Sean says:

    I recieve military retirement and VA disability (100%) is it taxed in Maryland. Under 65

    • Tax Advisor says:

      Hi Sean,
      According to Maryland state taxation laws, if you receive military retirement income, you will be able to subtract up to $5000 of your military retirement income from your federal adjusted gross income before determining your Maryland tax.
      If you are totally disabled, you may qualify for Maryland’s maximum pension exclusion of $27,100.

  17. Mike says:

    I am a Texas resident currently serving overseas. I plan to retire upon completion of this assignment. I own a home in CA., where I spent 13 years prior to moving overseas and am trying to decide whether or not to retire there. What can I expect from the state of CA. as far as taxes on my retirement…………potential back pay do to domicile status, tax rate, etc.

    • Tax Advisor says:

      Hi Mike,
      Thanks for serving our country. Regarding your retirement, CA military retirement pay taxation follows the same rules as the federal taxation does for military retirement pay taxation.

    • Chris says:

      I currently live in CA and am planning to move away soon. I retired here in 2008 (FL resident while AD), and have decided unless you are wealthy, you cannot retire here on a military pension. CA taxes everything and is noted for having the highest overall tax burden in the country, and growing almost daily.

      CA has 1/3 of the welfare receiptiants in the country and a $50 billion deficient, so taxes will not be going down in our lifetime.

      The first year of my retirement was a huge shock when the tax bills came, and I really thought I had prepared for it.

      I love it here, but CA does not love or appreciate me being here so I will soon be moving to NC or FL so that I can keep some of my pension instead of giving it to state to waste.

  18. Angela says:

    we are looking to retire in 2 yrs and thinking on Tennessee, Ohio and Florida. which of the three would be the best for us( tax wise ). hubby will be continuing to work and draw his retirement….. thank you

  19. Carol Kellett says:

    What about Minnesota?

  20. Beth Shorts says:

    I am the spouse of a miltary retiree. We live in Maryland. I am disabled, but need to know what constitutes “totally disabled” for tax purposes and how does one go about proving that to the tax authorities? Also, where can we get information on the Maryland income tax exemption on the first $5000 of his retirement income?

    • Tax Advisor says:

      Hi Beth,
      The IRS defines totally disabled as a permanent disability that prevents you from “engaging in consistent employment”. It does not include activities that relate to ordinary personal and household maintenance. You’ll have to obtain a statement from your physician certifying that you are totally disabled in order to prove it.

      If you are 65 or older and totally disabled, you may qualify for Maryland’s maximum pension exclusion of $27,800 under certain conditions.

      Regarding the $5000 exemption on the military retirement income, the army benefits page for Maryland lists all the information you’ll need. Here is the link;

      When filing your taxes on RapidTax, our application is designed to help you easily file your taxes if you are a military retiree, or spouse of one, if disabled, etc.

  21. James Spangler says:

    I live in Pennsylvania and am receiving military retirement pay. Do I have to pay state income taxes on this money?

    • Tax Advisor says:

      Hi James,
      According to Pennsylvania income tax law, as long as you retired from the military with either years of service or age, your retirement income is not taxable.

  22. Rick says:

    I’m retiring early, 57, single and considering moving from Iowa to St. Croix. What are the tax rates for US citizens there on miltiary retirement pay and VA disability pay?

  23. Paul Swallow says:


    I live in Massachusetts and am a retired veteran of 29 years service and in receipt of a pension (military retirement pay). I have a bit of a twist. I am Canadian and my service was in the Canadian Navy. I have immigrated to the US and am currently a Permanent Resident (will convert to a citizen when allowed). I am exempt from paying federal tax on my Canadian pension but am forced to pay state. I have used a tax agent to prepare my returns and they said they’ve enquired about my case with state tax officials and they maintain that I have to pay. Doing a bit of research on my own I see that US Military pensions are non-contributory. Canadian military pensions are a contributory plan. As such, would I fall under either of these clauses:

    “G.L. c. 62, § 2. One of these modifications excludes “[i]income from any contributory annuity, pension, endowment or retirement fund of the United States government or the commonwealth or any political subdivision thereof, to which the employee has contributed.” G.L. c. 62, § 2(a)(2)(E). See also G.L. c. 62, § 3(b)(a)(4). Under the terms of this statute, either state or federal pension payments are exempt from Massachusetts income tax if the pension funds are contributory.”

    Any help or guidance would be appreciated!



    • K McD says:

      Would love to hear an update.
      I guess it matters if you contributed to the US during your service. As I read that, Canadian military pensions are contributory to Canada – “who you gave your service for”. Or, where the funds are coming from.

      So if you served in Canada’s military and received pay for your service and retirement from Canada, then it seems it doesn’t qualify as US anything.

      However, if you received military pay and retirement from the US, then you definitely should fight it 🙂

  24. Mia says:

    My husband is going to retire from military in a few months. I have a long question. Right now, residency is in his home state Illinois, we have a house in California that being rent out. and we are going to move to oversea. we won’t be living in the states. I need your advice. should we keep Illinois state residency? or change to California since we have property there? please remember, we will be living oversea. If we do keep the Illinois residency, do we file non-resident tax to California (have rental property there). thank you for reading my question.

  25. Charlie Dean says:

    I qualify for the Retired military pay income exemption in NC. I served 21 years from 1966-1987. What is the correct distribution code for box 7. DFAS assigned code 7 for this box, indicating a normal distribution. Unfortunately, this code adds that distribution to my state tax return and balloons the amount due.

    • Chris says:

      I think it goes on p.2 under “Other Deductions”. If not, check out Form D-400. It falls under the Bailey Directive. Search PD-99-1 and state statute G.S. 105-134.5 and 134.6.

  26. Dave says:

    Are people reading the article? Seems like most of the questions could be answered if folks just read.

  27. assisted living Ann Arbor MI says:

    My husband goes into assisted living. So that you can qualify for the benefits I’ll have to transfer some cash to my daughter. Is this legal?.

    • Tax Advisor says:


      I suggest contacting your state’s assisted living association for information on legalities. To answer your question, it may depend on a few more factors of your situation (possibly how involved your daughter is on the financial side of things). These associations typically have a website with a hotline or phone number to call and ask specific questions. I hope this helps!

  28. james says:

    I am about to retire in Phenix city AL, what would be my tax exemptions in that state?

    • James says:

      Phenix City? Man, what a sad place to retire! I grew up there (South Girard, Russell County HS), my dad still lives there, and I pass through occasionally. Seems to get worse every time I come by. Columbus is growing though.

    • James says:

      I’m living in Phenix City, AL. Great tax breaks for military retires. Especially if you meet a cetain disability rating. Your kids can go to college free and receive a check while attending. Look into further, I think it’s the best thing going and you’re close to Columbus, Atlanta and various other cities that you can visit over a weekend. Good choice in my opinion. Good luck and good retirement my fellow brother in arms!!

  29. Jeff says:

    Iowa just became tax free for military retiree pensions. Gov. Branstadt signed it into law on Memorial Day at Camp Dodge with FULL media coverage and was televised live for all to see. He and the Lt Gov even wore their old uniforms from when they were in the military. The Governor has made it policy to make sure vets are welcome in Iowa by signing legislation (on Memorial Day as well) to give vets a boost with various programs such as making sure that vets get hired first in all fields of endeavor, skilled labor, IT, business mgt, technical, engineering etc. as well as full tuition at all state run universities (U of I, ISU and UNI). Good first steps but more can be done I think.

    • Gary says:

      It’s about time Iowa stepped up to the plate and started taking better care of veterans! I was born and raised in Iowa and left when I was 18 to join the Air Force. Now I’m retired from the Air Force with 24 years of service and previously wouldn’t even consider coming back to Iowa because I simply couldn’t afford to live there and pay the hefty taxes. This was a good move and long overdue! Now they need to find a way to reduce the income taxes down from the current 9% you will pay if you make over $63K per year! No wonder the kids grow up and leave the state. And the few who stay are the ones who will pay the big-time taxes (I believe 9% is 9th highest in the country). Iowa must find a ways to break this cycle and it started with this nex tax bill signed last memorial day. Good job Iowa…I’ll stay tuned and watch for more to come!!!! You never know, maybe one day Iowa will become veteran friendly enough I’ll want to return back to my native state!

  30. phil rodriguez says:

    I feel that every person who did 20 years or more should not have pay any federal taxes on their retirement/disability checks. I only did 3 1/2 years in the Marines however my wife did 27 years and she earned that right as well as any other retiree. I also feel that no wound in action vet should pay any taxes as well.

  31. Garrett says:

    I retire soon and may be moving to Minnesota for work. I did not see any info for that state. Can you help me with that info?

  32. military wife says:

    My husband is a retired disabled vet we would like to relocate but do not want too much of his money to be taxed since I would have to look for another job. Which State would take less taxes out Georgia or North Carolina.

  33. Nash says:

    You said Colorado may exclude up to 20,000 if you are 55-64, since hubby is the one in the military, they will go by his age not mine, (I am 3 years older) even though we file married filing jointly, is that right?

  34. Bob says:

    I am retired navy and live in central Indiana, Paying indiana state taxes on my retirement pay. I currently have an job transfer opportunity in Terre Haute, IN which is not to far from the Illinois border. I’m I correct to state that it would be beneficial to live in Illinois and commute to Terre Haute in order to benefit from the tax exempt status on Military retirement pay in Illinois?

    • Tax Advisor says:

      Hi Bob,

      That would be more beneficial, financially.

    • Steve says:

      I am retired military and have been living in Illinois for the past 8 years. I do pay Federal Taxes on my retirement pay, but no state taxes. The other nice thing that most of this forum isn’t talking about is property tax. I’m 70% disabled, therefore, I do not pay property tax in Illinois, due to their tier system. I think when we talk taxes, we need to discuss all taxes, sales, motor, etc. Most articles on the subject only discuss state tax. We need to have a comprehensive picture of all taxes upon retirement.

  35. steve says:

    I haven’t seen anything on kentucky. I know they have some sort of military retired pay exemption but what about (VA disabilty compensation (90%). Is this exempt? Is it included in the $41k exemption? Is it all taxed?
    Any thoughts would be appriciated.

  36. Patty says:

    South Dakot! No state tax of any kind! Florida too, for you snow birds!

  37. Sharon says:

    I didn’t see anything about New Mexico. Any tax on military retirement?

  38. Gary Hammond says:

    States that offer an exemption and still have income tax for the population are great. If you go to a state like FL, you will pay the equivalent if income tax in other taxes that must make up the difference for education, roads, etc.
    NC is ideal for those that fit into the exemption. It is the equivalent of states that exempt all military ret pay and is in a good location.

  39. Robert Schneider says:

    My dad is 100% disabled due to military combat. So his retirement and disability is not taxed. He is 82. We live in Maryland, would he pay tax?

  40. Annie Mae says:

    I just retired from the military in September 2014. I claim resident in Washington state. I am currently living in Virginia. When do I start paying state income tax for Virginia?

  41. Chris says:

    If I move from CA to NC around mid-year, is my military pension taxable for 6 months in CA or is it figured from your residence on Dec 31 for the entire year?

    • Bill says:

      Hi Chris,

      We moved from CA to KY mid-year and had to file a “Part-Year Resident” return for CA. Also, make sure your vehicle tags are transferred to NC, then verify transfer with CA. When we moved, CA claimed they didn’t get our vehicle transfer info and tried to levy on our bank account. It was a nightmare getting it corrected.

  42. Edward says:

    I am in the active duty military and will retire in a few years. My wife and I love California, but there doesn’t seem to be any military or other tax advantages for retiring there. Can you tell me if there are any tax breaks for veterans or military pensions in California? Looking for some silver lining for retiring in California other than we love Northern California.

    • Tax Advisor says:

      Hi Edward,
      Thank you for serving our country. You’re right about California not having military retirement tax advantages. As you probably know, your retirement income would be taxed. On the other hand, California tax advantages for military retirees including Disabled Veteran Property Tax Exemptions, California National Guard Tuition Scholarship Program, Education and Tuition Assistance, Vehicle Tags, as well as Hunting and Fishing License privileges.

      To learn more about eligibility for these benefits and to explore other tax advantages, I would suggest checking out the US Army’s website. Here’s the link;

      Enjoy your retirement! Once again, thank you for serving our country Edward!

      • Bryan says:

        I currently live and retired in Washington State. I looked at my Retirement Statement yesterday and $228.00 (Federal Income Tax Withheld) is taken out monthly. How/What do I need to do in order to take advantage of tax exempt in Washington State?

        Thank you

        • Tax Advisor says:

          Hi Bryan,
          Taxes are broken down into two groups: Federal and State. Everyone is required to pay federal taxes. With that said, as a resident of Washington, you have to pay federal taxes but you do not have to pay state taxes.

          Your statement is correct. If you need any help reporting this income on your tax return, our tax team is available by phone, chat and email support to help.

  43. tammy says:

    Husband just retired from AF after 24 years. We are in NC now and realize they tax military retirement pay. He is working a contracting position so we are able to live anywhere. Are they any military tax benefits in Utah?

  44. Dave says:

    Iowa state law changed and military pensions are now tax exempt effective 26 May 2014.

  45. christopher mayo says:

    Im retired military living in hawaii because my wife is still active duty and I’m a texas resident. Should my retired military pay still be taxed ?

  46. Andy says:

    I am retired AF, planning to relocate from NY to NJ. I am also retired from a utility company in NY, drawing a pension from that company. My question is will i be required to pay state taxes on that pension, in New Jersey?

    • Tax Advisor says:

      Hi Andy,

      Typically, your retirement is taxed by the state where you are living when you receive it. In your case, since you will be moving to NJ, you will be taxed by NJ standards.

  47. Robert Anderson says:

    Okay, so I retired in 1982 with 25 years of service. I guess in NC I would be exempt from state tax. Is that correct?

    • Tax Advisor says:

      Hi Robert,

      This will depend on your residency and if you are receiving any other income. Take a look at the NC Department of Revenue website HERE. You can choose your residency and follow the corresponding chart.

  48. Josh says:

    I am thinking about retiring in Oklahoma. What are the beneficial benefits of retiring in Oklahoma?

    • Tax Advisor says:

      Hi Josh,

      To a point, this depends on which state you would be moving from. Oklahoma falls on fairly middle ground with low property taxes but fairly high sales tax compared to other states. I suggest taking a look further HERE.

  49. Wayne M Breitenbucher says:

    I have been retired since 09 and claim FL as my state of legal residence. My retirement check has been taxed since retirement? I now reside in Texas, but if I am reading it right, I should still not be taxed. Please advise.

    • Tax Advisor says:

      Hi Wayne,

      Your retirement will be taxed by the state you are a resident of at the time of retirement (not the time that you worked before retiring). That being said, you are correct in that you should not be taxed by either Florida or Texas. Both of these states are income tax-free and do not tax retirement income either. I suggest taking a look at a statement from your retirement income. This statement will be similar to a pay stub that you used to receive while employed. You should be able to see where taxes are being withheld from. Keep in mind that you could be taxed federally. If it seems as though your retirement is being incorrectly taxed by TX or FL, I strongly suggest giving your retirement provider a call directly as it may be a mistake on their part.

  50. Tom says:

    Looking to retire in the next couple years and was wondering is your military pension taxation based off where you live or work? Thanks

  51. Marcellus says:

    I retire next year (age 37) and I plan on living in GA. Judging by this site my retirement will be taxed at the regular rate until I’m 63? Does GA have any other benefits for retired vets?

  52. Joan Wallace says:

    I received my ex husband military retirement this year and would like to know, is the portion I receive taxable . I live in the state of Michigan.

    • Tax Advisor says:

      Hi Joan,

      Typically, this amount is fully taxable to you and you should receive a 1099R statement at the end of the tax year for the portion you receive.

  53. Jim Kleinfelder says:

    You can now add Minnesota to the list of states that do not tax military retirement income (pensions and benefits). It takes effect June 01, 2017. Strange date, but, works for me.

  54. Howard Ward says:

    I’ve live in the state of Florida since June, 2012. I purchase my home in June 2013 and I’m military retired veterans since January 1997.I’d like to know if my military retire pay (GROSS) is non taxable here in the state of Florida? Also, I’m 100 % service connected disability veterans…Thank you

  55. Bill says:

    Can you please explain the KY rule. It says that military pension is tax exempt if it is less than $41K. However, what if someone is slightly above that, say $43K. Is the entire $43K taxed, or just the amount over $41K? I’m considering relocating to KY for a new job and want to better understand the tax implication on my military pension. Thank you.

  56. Angie says:

    What about Georgia?

    • For the state of Georgia, there are no special allowances for military personnel. However, Georgia does offer a retirement exclusion that is rather generous to all residents. For the year 2016, the maximum exclusion for taxpayers between the ages of 62-64 would be $35,000. The exclusion is increased to $65,000 for taxpayers 65 and older.

  57. Sam Rosado says:

    Does Puerto Rico tax military pensions??

    • Unfortunately we do not support preparation for territories such as Puerto Rico and will not be able to answer your question. We apologize for the inconvenience. Please contact the taxation related department for Puerto Rico for further information. Thank you.

  58. Angel Carrero says:

    Moving to Michigan, Retired Navy, I will become a resident, will my military retired pay be taxed by the feds and the state. I retired in VA but my family is all moving to Michigan, so becoming a resident will this make my Navy retired pay be taxed or not???

    • If Michigan becomes your resident state, you will be required to pay taxes on your military retirement pay. You can contact the State authority of Michigan for more information regarding which of your source income will be taxed and the cost of those state taxes.

  59. Spike says:

    Like many others on active duty, I enjoy the benefits of a Home of Record that doesn’t tax out-of-state mil income. My retirement plan includes a home in a different state (Nevada) that doesn’t tax income at all.

    Question: can I keep a house in a taxed state (CA) and still stay tax-free if Nevada is my primary residence? Are there specific requirements for exemption (time at each, etc.), or would I be stuck paying some percentage of California tax regardless?

  60. Spike says:

    Thank you very much, and I appreciate the link!

  61. Robert Hunnicutt says:

    Recently retired on 1 October 2017 and a resident of Texas. I moved to Oklahoma on 1 July 2017 with 4 months of transition leave. I had no other income besides AD pay during this time and was taxed as a Texas resident. Will I be required to pay Oklahoma taxes from July when I moved here or from 1 Oct when I officially retired? Oklahoma taxes break is 75% or my retirement or 10K? Thanks.

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