State Retirement Income Tax

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.

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 Ohio
Connecticut Louisiana Mississippi Pennsylvania
Hawaii Maine Missouri West Virginia
Illinois Massachusetts New Jersey Wisconsin

States With Special Military Retirement Pay Exemptions

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

Arizona1 Indiana5 North Carolina9
Colorado2 Kentucky6 Oklahoma10
Delaware3 Maryland7 Oregon11
Idaho4 Nebraska8 South Carolina12
  1. The first $2,500 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. Tax-free for retirees 65 and older, or disabled retirees 62 or older.
  5. Up to $6,250 is tax-free
  6. Partially exempt if retired after December 31, 1997; exempt if retired before January 1, 1998
  7. The first $10,000 is tax-free, that amount increases to $15,000 at age 65.
  8. Special rules see our Nebraska State Benefits Page.
  9. Only if you had at least 5 years active duty before August 12,1989
  10. The greater of 75% of your retirement pay or $10,000
  11. 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.
  12. If you are under 65, up to $8,800 is tax-free. That amount increases to $21,000 at age 65.

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Military Taxes