Since the spring of this year, 6 more states have added benefits for military retirees by exempting military retiree pay in some capacity. Not all states offer full exemption. When reviewing which states offer exemptions, know the details in regards to age or gross income amount.
As of this writing, California and the District of Columbia are the only areas that do not offer any tax exception on military retiree pay.
Alabama: Retiree pay is tax-free
Alaska: There is no state income tax for the state of Alaska, so retiree pay is tax-free!
Arizona: Retiree pay is tax-free after the 2021 bill was passed.
Arkansas: Retiree pay is tax-free
California: Following federal rules, California does not currently offer tax exemption on military retiree pay.
Colorado: Retiree pay under the age of 55 can exclude up to $10,000 income from their taxable income, those age 55064 can exclude up to $20,000, and those age 65 and up can exclude $24,000 of income
Connecticut: Retiree pay is tax-free
Delaware: Up to $2,000 of military retirement is excluded for those under age 60 and $12,500 for those 60 and older
District of Columbia: Following federal rules, DC does not currently offer tax exemption on military retiree pay.
Florida: There is no state income tax for Florida, so retiree pay is tax free.
Georgia: Retirees who are over 62 or permanently disabled may be eligible for an exclusion of retiree pay.
Hawaii: Retiree pay is tax-free
Idaho: Retiree pay is tax-free for those over age 65, and over 62 for disabled retirees.
Illinois: Retiree pay is tax-free
Indiana: Retiree pay is tax-free as of 2022.
Iowa: Retiree pay is tax-free
Kansas: Retiree pay is tax-free
Kentucky: Up to $31,110 is tax-free.
Louisiana: Retiree pay is tax-free
Maine: Retiree pay is tax-free
Maryland: The first $5,000 is tax-free and once age 55 or older $15,000 is tax-free.
Massachusetts: Retiree pay is tax-free
Michigan: Retiree pay is tax-free
Minnesota: Retiree pay is tax-free
Mississippi: Retiree pay is tax-free
Missouri: Retiree pay is tax-free
Montana: Following federal rules, DC does not currently offer tax exception on military retiree pay.
Nebraska: As of 2022, all military retirement is tax-free.
Nevada: There is no state income tax in Nevada.
New Hampshire: There is no state income tax in New Hampshire, there is tax on interest and dividends.
New Jersey: Retiree pay is tax-free. Honorably discharged veterans qualify for a one-time $6,000 tax deduction in the year after discharge.
New Mexico: As of March of 2022, the Governor of New Mexico announced a three-year income exemption for armed forces retirees starting in 2022. In 2022, $10,000 of military retirement income is exempt. In 2023, this amount increases to $20,000 and to $30,000 in 2024.
New York: Retiree pay is tax-free
North Carolina: Retiree pay is tax-free as of 2021.
North Dakota: Retiree pay is tax-free
Ohio: Retiree pay is tax-free
Oklahoma: In 2022, a state Senate press release shared that military retirement income would be fully tax free. Prior to 2022, the greater of 75% of retirement pay or $10,000 was tax exempt.
Oregon: Any military service before October 1, 1991 may be able to deduct a portion of retirement pay. Any military retirement for service after that is taxed normally.
Pennsylvania: Retiree pay is tax-free
Rhode Island: Retiree pay is tax-free as of 2022.
South Carolina: As of May 13, the South Carolina Governor signed H. 3247 into law while made military retiree pay 100% exempt from state income tax. Prior to this change in 2022, those under the age of 65 can deduct up to $17,000 of retirement pay while those 65 and older can deduct up to $30,000 when income outside of military retirement was earned.
South Dakota: There is no state income tax in South Dakota.
Tennessee: There is no state income tax in Tennessee, there is tax on interest and dividends.
Texas: There is no state income tax for the state of Texas.
Utah: Retiree pay is tax-free as of 2021.
Vermont: As of 2022, up to $10,000 of military retiree income was tax free for those with gross income less than $50,000 for single filers or $65,000 for joint filers.
Virginia: As of 2022, up to $10,000 military retiree pay is tax free for those 55 and over. In 2023, this amount will increase to $20,000. In 2024, the amount will increase to $30,000. In 2025, the amount will increase to a final amount of $40,000.
Washington State: There is no state income tax for the state of Washington.
West Virginia: Retiree pay is tax-free
Wisconsin: Retiree pay is tax-free
Wyoming: There is no state income tax for the state of Wyoming.
See Georgia H.B. 1064 signed 18 April 2022. Makes up to 35k tax free for military retirees under age 62 starting the 2022 tax year
I believe this only applies to military personnel who are receiving a ‘military pension’, not disability compensation for injuries the VA has determined and awarded compensation for ‘service-connected’ disabilities. Some states also offer disabled veterans, who are not retired military pensioners, and receive no military pension, a no real estate property tax benefit, or a discount, based on a graduated scale, depending on the percentage of the VA disability awarded for ‘service-connected’ disability, on their primary residence! That should be noted! As a disabled veteran myself, I think all veterans would like to see a complete list of all discounts, tax waivers, autos, insurance, and other living benefits offered by each state!