Utah Lowers Tax on Military Retirement Pay

Representation of state seal of utah

The state of Utah has become the latest to give its residents a tax break on military retired pay.

On March 11, 2021, Gov. Spencer J. Cox signed Senate Bill 11 into law, providing an average annual tax savings to military retirees and their survivors of $1,315, according to the state’s budget office.

Utah joins 13 other states in exempting all military retirement income from state taxes, 22 states offer partial exemptions of military retirement pay from taxation and nine states do not tax any earned income. That means that only six states, plus the District of Columbia, still fully tax military retirement pay.

See: Military Retirement and State Income Tax

The new law exempts military retirement pay as well as Survivor Benefit Plan (SBP) payments that are paid to some surviving dependents of military retirees.

The change, which is effective for the tax year beginning Jan. 1, 2021, also exempts some Social Security payments from income tax. However, military retirees can claim only one new income exemption per tax return.

Retirees with multiple sources of income will be allowed to exempt their military retirement payments from their total income when filing their taxes, thereby reducing their Utah tax bill.

Active duty, reserve and National Guard pay remains taxable for Utah residents unless they are serving in a designated combat zone.

Related: State Tax Information for Military Members and Retirees

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