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|
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.
States With Special Military Retirement Pay Exemptions
The following states have special provisions for military or public pensions:
- The first $2,500 of military retirement pay is exempt.
- 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.
- Up to $2,000 of military retirement excluded for individuals under age 60; $12,500 if 60 or older.
- Tax-free for retirees 65 and older, or disabled retirees 62 or older.
- Up to $6,250 is tax-free
- Partially exempt if retired after December 31, 1997; exempt if retired before January 1, 1998
- The first $10,000 is tax-free, that amount increases to $15,000 at age 65.
- Special rules see our Nebraska State Benefits Page.
- Only if you had at least 5 years active duty before August 12,1989
- The greater of 75% of your retirement pay or $10,000
- 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.
- 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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