States That Dont Tax Military Retirement 2019

Military retirement pay based on age or length of service is considered a taxable income for Federal income taxes and state income taxes in some states. Both military disability retirement pay and veteran’s benefits, including service-connected disability pension payments, are typically excluded from taxable income.

Understanding military retirement income taxes helps one better plan their retirement years, as these taxes can have a large impact on one’s financial plans and goals.

Generally, in order to be eligible for military retirement benefits, one needs to serve for 20 years. Military retirement pay is not considered earned income and no Social Security is withheld.

Laws vary greatly between states. Some states do not tax military retirement pay, and some states have specific tax exemption, such as exempting taxation up to a certain amount or being exempt depending on age or year of retirement. In Arizona, for example, up to $2,500 in military retirement pay can be exempted from taxable income. In Kentucky, military pensions are fully exempt if the person retired before 1997.

The states can be divided into four categories: no state income tax; exempts military pension income from state taxes; offers special tax treatments for military pensions, and treats military retirement pay as ordinary taxable income.

The following states have state income tax but exempt military retirement pay:

The following states have no state income tax, and, therefore, do not tax military retirement pay:

Below is a table of each state’s treatment of military retirement pay.

State Military Retirement Pay Tax Info 2019 Pop.
AlabamaMilitary Retirement Pay Exempt4,898,246
AlaskaNo State Income Tax735,720
ArizonaUp to $2,500 in military retirement pay can be exempted from taxable income.7,275,070
ArkansasMilitary Retirement Pay Exempt3,026,412
CaliforniaNo Special Tax Treatment of Military Retirement Pay39,747,267
ColoradoThe following military pension amounts can be excluded from Colorado income, based upon age: $20,000 (55-64); $24,000 (65+)5,770,545
ConnecticutMilitary Retirement Pay Exempt3,567,871
DelawareThe following military pension amounts can be excluded from Delaware income, based upon age: $2,000 (Under 60); $12,500 (60+)975,033
FloridaNo State Income Tax21,646,155
GeorgiaNo Special Tax Treatment of Military Retirement Pay10,627,767
HawaiiMilitary Retirement Pay Exempt1,416,589
IdahoMilitary pensions are partially exempted according to the following table: - Married Filing Jointly (must be either 65+ or 62+ and disabled): $47,934 - Single (must be either 65+ or 62+ and disabled): $31,9561,790,182
IllinoisMilitary Retirement Pay Exempt12,700,381
IndianaMilitary retirees 60 and older are allowed to deduct up to $5,000 of their pension.6,718,616
IowaMilitary Retirement Pay Exempt3,167,997
KansasMilitary Retirement Pay Exempt2,910,931
KentuckyMilitary pensions are fully exempt if you retired before 1997. Personnel retiring after 1997 are subject to taxation to the extent their pension exceeds $41,110.4,484,047
LouisianaMilitary Retirement Pay Exempt4,652,581
MaineMilitary Retirement Pay Exempt1,342,097
MarylandRetirees are able to exclude the first $5,000 ($15,000 if 55 and older) of their military pension benefits.6,062,917
MassachusettsMilitary Retirement Pay Exempt6,939,373
MichiganMilitary Retirement Pay Exempt10,020,472
MinnesotaMilitary Retirement Pay Exempt5,655,925
MississippiMilitary Retirement Pay Exempt2,987,895
MissouriMilitary Retirement Pay Exempt6,147,861
MontanaNo Special Tax Treatment of Military Retirement Pay1,074,532
NebraskaSpecial provisions apply. See Note under Nebraska for more details.1,940,919
NevadaNo State Income Tax3,087,025
New HampshireMilitary Retirement Pay Exempt1,363,852
New JerseyMilitary Retirement Pay Exempt8,922,547
New MexicoExemption may be allowed for low-income retirees.2,096,034
New YorkMilitary Retirement Pay Exempt19,491,339
North CarolinaUp to $4,000 is exempt from North Carolina income tax.10,497,741
North DakotaNo Special Tax Treatment of Military Retirement Pay760,900
OhioMilitary Retirement Pay Exempt11,718,568
OklahomaRetired servicemembers may deduct the greater of $10,000 or 75% of their retirement income from Oklahoma income tax.3,948,950
OregonYou may subtract your pension from Oregon income tax to the extent it was earned before October 1, 1991. If all of your service was after October 1, 1991, your entire pension is taxable.4,245,901
PennsylvaniaMilitary Retirement Pay Exempt12,813,969
Rhode IslandNo Special Tax Treatment of Military Retirement Pay1,056,738
South CarolinaMilitary pensions can be deducted in the following amounts: Under 65: $17,500 per year; Age 65+: $30,000 per year5,147,111
South DakotaNo State Income Tax892,631
TennesseeNo State Income Tax on Earnings or Pensions6,833,793
TexasNo State Income Tax29,087,070
UtahUtah taxes military pensions. People over 65 may be eligible for a $450 (single) or $900 (married filing jointly) exclusion. However, income phaseouts apply.3,221,610
VermontNo Special Tax Treatment of Military Retirement Pay627,180
VirginiaNo Special Tax Treatment of Military Retirement Pay8,571,946
WashingtonNo State Income Tax7,666,343
West VirginiaThe first $2,000 in pension income can be excluded.1,791,951
WisconsinMilitary Retirement Pay Exempt5,832,661
WyomingNo State Income Tax572,381