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Not taxed
34
Partially taxed
12
Fully taxed
5

States that Don't Tax Military Retirement 2023

States that Don't Tax Military Retirement 2023

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, 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 exemptions, 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: Alabama, Arizona, Arkansas, Connecticut, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, Ohio, Pennsylvania, and Wisconsin. The following states have no state income tax and, therefore, do not tax military retirement pay: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

The following states partially tax military retirement:

  • Colorado: Up to $24,000 is exempt for 65 and up; $20,000 for 55-64; $15,000 under 55
  • Delaware: Up to $12,500 exempt for under 60 and up to $12,500 exempt for 60 and older.
  • Georgia: No specific exemption. Taxpayers 62-64 (or disabled) can exclude up to $35,000, and 65 and older can exclude up to $65,000.
  • Idaho: Up to $34,332 of qualified retirement benefits may be exempt for single filers ($54,498 for joint filers) 65 and older (or 62 and disabled).
  • Kentucky: All military pay is exempt if you retired in 1997 or earlier. Otherwise, up to $31,110 in a pension can be excluded.
  • Maryland: Up to $5,000 is exempt up to 55 years old, and up to $15,000 if 55 and older.
  • New Mexico: Military retirement is taxable as income, but low-income taxpayers 65 and older may exempt up to $8,000 of income from New Mexico taxes. As income increases, the exemption phases out and disappears for single filers making more than $28,500 (joint filers making more than $51,000). All income is exempt for taxpayers 100 or older.
  • Oklahoma: up to 75% or $10,000 is exempt, whichever is greater.
  • Oregon: Military retirement is taxable for service after October 1, 1991, and is exempt for service before that date.
  • South Carolina: Up to $17,500 for 65 and under who have other earned income ($3,000 otherwise). Up to $30,000 is exempt for 65 and older, regardless of other income.
  • West Virginia: first $2,000 in pension income can be excluded

States that Don't Tax Military Retirement 2023

State tax policies can change with little notice. Always consult local tax experts for the latest information.

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State
Don't Tax Military Retirement
Military Retirement Pay Tax Info
AlabamaNot taxedMilitary Retirement Pay Exempt
AlaskaNot taxedNo State Income Tax
ArizonaNot taxed2500
ArkansasNot taxedMilitary Retirement Pay Exempt
CaliforniaFully taxedNo Special Tax Treatment of Military Retirement Pay
ColoradoPartially taxed1000000000000000
ConnecticutNot taxedMilitary Retirement Pay Exempt
DelawarePartially taxed2000601250060
District of ColumbiaPartially taxed
FloridaNot taxedNo State Income Tax
GeorgiaPartially taxedNo Special Tax Treatment of Military Retirement Pay
HawaiiNot taxedMilitary Retirement Pay Exempt
IdahoPartially taxed1000000000000000
IllinoisNot taxedMilitary Retirement Pay Exempt
IndianaNot taxed605000
IowaNot taxedMilitary Retirement Pay Exempt
KansasNot taxedMilitary Retirement Pay Exempt
KentuckyPartially taxed1997199741110
LouisianaNot taxedMilitary Retirement Pay Exempt
MaineNot taxedMilitary Retirement Pay Exempt
MarylandPartially taxed50001500055
MassachusettsNot taxedMilitary Retirement Pay Exempt
MichiganNot taxedMilitary Retirement Pay Exempt
MinnesotaNot taxedMilitary Retirement Pay Exempt
MississippiNot taxedMilitary Retirement Pay Exempt
MissouriNot taxedMilitary Retirement Pay Exempt
MontanaFully taxedNo Special Tax Treatment of Military Retirement Pay
NebraskaNot taxedSpecial provisions apply. See Note under Nebraska for more details.
NevadaNot taxedNo State Income Tax
New HampshireNot taxedMilitary Retirement Pay Exempt
New JerseyNot taxedMilitary Retirement Pay Exempt
New MexicoPartially taxedExemption may be allowed for low-income retirees.
New YorkNot taxedMilitary Retirement Pay Exempt
North CarolinaNot taxed4000
North DakotaNot taxedNo Special Tax Treatment of Military Retirement Pay
OhioNot taxedMilitary Retirement Pay Exempt
OklahomaPartially taxed1000075
OregonPartially taxedYou 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.
PennsylvaniaNot taxedMilitary Retirement Pay Exempt
Rhode IslandFully taxedNo Special Tax Treatment of Military Retirement Pay
South CarolinaPartially taxed65175006530000
South DakotaNot taxedNo State Income Tax
TennesseeNot taxedNo State Income Tax on Earnings or Pensions
TexasNot taxedNo State Income Tax
UtahNot taxed65450900
VermontFully taxedNo Special Tax Treatment of Military Retirement Pay
VirginiaFully taxedNo Special Tax Treatment of Military Retirement Pay
WashingtonNot taxedNo State Income Tax
West VirginiaPartially taxed2000
WisconsinNot taxedMilitary Retirement Pay Exempt
WyomingNot taxedNo State Income Tax
showing: 51 rows

States that Don't Tax Military Retirement 2023

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