Some states don't charge income tax on military retired pay. In all states, U.S. Department of Veterans Affairs 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.
Related: State tax information for active duty members, retirees, and survivors.
States That Don't Tax Military Retirement Pay
The following states do not tax retired military pay.
- Alabama
- Arizona
- Arkansas
- Connecticut
- Hawaii
- Illinois
- Indiana
- Iowa
- Kansas
- Louisiana
- Maine
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Nebraska
- New Jersey
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma (beginning in 2022)
- Pennsylvania
- Rhode Island (beginning in 2022)
- South Carolina (beginning in 2022)
- Utah
- West Virginia
- Wisconsin
States With Special Military Retirement Pay Exemptions
The following states have special provisions for military or public pensions:
- Colorado - Military retirees ages under age 55 can exclude up to $10,000 of their retirement pay from their gross income; those ages 55 - 64 can exclude up to $20,000 and those 65 and over can exclude up to $24,000.
- Delaware - Up to $12,500 of military retirement excluded for retirees under age 60.
- Georgia - Taxpayers over 62 or permanently disabled may be eligible for an exclusion of retired pay from gross taxable income.
- Idaho - Tax-free for retirees 65 and older, or disabled retirees 62 or older.
- Kentucky - Up to $31,110 is tax-free, you may be able to exclude more in some situations.
- Maryland - The first $5,000 is tax-free, that amount increases to $15,000 at age 55.
- Montana - Up to $4,640 is exempt if gross income is less than $38,660
- New Mexico - Beginning in 2022, up to $10,000 of military retirement is tax-free. That amount increases to $20,000 in 2023, and to $30,000 after that.
- Oregon - If you had military service before Oct. 1, 1991 you may be able to deduct a portion of your retirement pay.
- Vermont - Beginning in 2022, up to $10,000 in retirement income is tax-free for those with a gross income less than $50,000 for single filers or $65,000 for joint filers.
- Virginia - In 2022, up to $10,000 in retirement pay is tax-free for retirees 55 and older. That amount increases by $10,000 each year until 2025, when up to $40,000 is deductible.
Related: State tax information for active duty members, retirees, and survivors.
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