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 Iowa Michigan New York
Arkansas  Kansas Minnesota North Dakota
Connecticut Louisiana Mississippi Ohio
Hawaii Maine Missouri Pennsylvania
Illinois Massachusetts New Jersey West Virginia
      Wisconsin

States With Special Military Retirement Pay Exemptions

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

Arizona1 Indiana6 North Carolina10
Colorado2 Kentucky7 Oklahoma11
Delaware3 Maryland8 Oregon12
Georgia4 Nebraska9 South Carolina13
Idaho5    
  1. The first $3,500 of military retirement pay is exempt.
  2. Military retirees ages 55 - 64 can exclude up to $20,000 in any one tax year from their retirement pay, those 65 and over can exclude up to $24,000.
  3. Up to $2,000 of military retirement excluded for individuals under age 60; $12,500 if 60 or older.
  4. Taxpayers over 62 or permanently disabled may be eligible for a $4,000 exclusion of retired pay.
  5. Tax-free for retirees 65 and older, or disabled retirees 62 or older.
  6. Up to $6,250 plus 25% of retired pay over that amount is tax-free for 2019. That will increase to 50% in 2020, 75% in 2021 and 100% for taxable years beginning after 2021.
  7. Up to $31,110 is tax-free, you may be able to exclude more in some situations.
  8. The first $5,000 is tax-free, that amount increases to $15,000 at age 55.
  9. Special rules see our Nebraska State Benefits Page.
  10. Only if you had at least 5 years active duty before August 12,1989
  11. The greater of 75% of your retirement pay or $10,000
  12. If you had military service before October 1, 1991 you may be able to deduct a portion of your retirement pay. If you didn't have military or federal service prior to October 1, 1991, your military retirement is taxed normally.
  13. If you are under 65, up to $14,000 is tax-free. That amount increases to $27,000 at age 65.

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

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Military Taxes