List: Military Retirement Income Tax

military retirement

If you’ve retired from the military, you’ve earned a pension. How large that pension is depends on your pay grade. But to a lesser extent, it also depends on where you live in the country.

Since certain states tax military retirement income at different rates, the amount that ends up in your pocket varies from state to state, just like veterans property tax exemptions.

Take a look at this chart to see if you’re receiving all the tax benefits you should be.

 

State

Military Retirement Income Tax Details

Alabama Alabama does not tax military retirement pay.
Alaska Alaska does not have personal income tax.
Arizona Arizona exempts $2,500 in tax for military retirees.
Arkansas Arkansas exempts $6,000 in tax for military retirees.
California California taxes military retirement pay for California residents. Nonresidents are not taxed on military retirement pay received after Dec. 31, 1995.
Colorado Colorado residents who were 55-64 years of age as of December 31 of the fiscal year may exclude up to $20,000 of their military retirement benefits received during the calendar year. Residents who were 65 years of age or older as of December 31, may exclude up to $24,000 of their military retirement benefits received during the calendar year.
Connecticut Connecticut taxes military retirement pay.
Delaware Delaware excludes up to $2,000 of military retirement pay for individuals under age 60, and up to $12,500 if 60 or older.
Florida Florida does not have personal income tax.
Georgia Tax payers who are 62 or older, or permanently and totally disabled regardless of age, may be eligible for a retirement income adjustment on their Georgia tax return. For married couples filing joint returns with both members receiving retirement income, the maximum adjustment for that year may be up to twice the individual exclusion amount. Retirement income exceeding the maximum adjustable amount will be taxed at the normal rate.
Hawaii Hawaii does not tax military retirement pay.
Idaho In Idaho, retirement benefits paid by the United States to a retired member of the U.S. Military or the un-remarried widow of such member if the recipient is age 65 or older, or disabled and age 62 or older are deductible. The amount deducted must be reduced by retirement benefits paid under the Federal Social Security Act or the Tier 1 Federal Railroad Retirement Act. The maximum amounts that may be deducted for 2009 are: MARRIED FILING JOINTLY: Age 65 or older or age 62 or older and disabled is $41,814. SINGLE: Age 65 or older or age 62 or older and disabled is $27,876. The amount of deduction varies from year to year.
Illinois Illinois does not tax military retirement pay.
Indiana Indiana allows military retirees who are age 60 or above to deduct up to $5,000 of military benefits.
Iowa Military Retirement Benefits Exclusion from Iowa Income tax – recently-enacted legislation (2014) exempts federal retirement pay received for military service and survivor benefits from state individual income tax. Because the change is retroactive to January 1, 2014, individuals receiving military retirement benefits may immediately change or eliminate the amount of Iowa tax being withheld on their military pension.
Kansas Kansas exempts military, civil-service and in-state public pensions from state income taxes, but out-of-state pensions are fully taxed.
Kentucky Kentucky exempts military retirement pay from taxation if you retired in 1997 or before. If you retired after 1997, your pay is subject to state tax if it exceeds $41,110.
Louisiana Louisiana allows persons 65 years or older to exclude up to $6,000 of annual retirement income from their taxable income. Federal retirement benefits received by federal retirees, both military and nonmilitary, may be excluded from Louisiana taxable income.
Maine Maine waives $6,000 in pension income that is included in your federal adjusted gross income.
Maryland Maryland exempts the first $5,000 of retirement income for retired service members.
Massachusetts Massachusetts does not tax military retirement pay.
Michigan Michigan does not tax military retirement pay.
Minnesota Minnesota taxes military retirement pay.
Mississippi Mississippi does not tax military retirement pay.
Missouri Missouri gives disability broad exemptions from federal income tax to retirees who entered the military before September 24, 1975, and to members receiving disability retirement income based on combat injuries or who could receive disability payments from the VA. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.
Montana Montana exempts the first $3,600.00 of retired military pay from income tax as long as your federal adjusted gross income is $30,000 or less and you are filing a single return, filing jointly with your Spouse and only one of you have taxable retirement income, or you are filing as head of household.
Nebraska Nebraska allows tax payers who retired after July 18, 2014 the option to exclude 40% of their military retirement income for 7 taxable years or exclude 15% until they turn 67. All other income is taxable.
Nevada Nevada does not have personal income tax.
New Hampshire New Hampshire does not tax military retirement pay.
New Jersey New Jersey does not tax military retirement pay.
New Mexico New Mexico offers a low- and middle-income exemption. The maximum exemption is $2,500. To qualify, the amount on line 7 of the state income tax form must be equal to or less than $36,667 (single), $27,500 (married filing separately), or $55,000 (married filing jointly. A deduction also applies for those 65 and older if your adjusted gross income is not over $51,000 for a joint return, $28,500 for a single taxpayer, or $25,500 for a married taxpayer filing separately.
New York New York does not tax military retirement pay.
North Carolina North Carolina allows military members to receive a deduction up to $4,000 ($8,000 on joint returns) for military pay or survivor’s benefits. Those with 5 years of service since August 12, 1989 are fully exempt.
North Dakota North Dakota excludes $5,000 from military pensions, minus the amount of Social Security received. Out-of-state government pensions are fully taxed.
Ohio Ohio does not tax military retirement pay.
Oklahoma Oklahoma waives the greater of $10,000 or 75 percent of retirement income from taxation for retired service members.
Oregon Oregon military retirees may be eligible for a tax waiver. For more information, contact the Oregon Department of Revenue.
Pennsylvania Pennsylvania does not tax military retirement pay.
Rhode Island Rhode Island taxes military retirement pay and follows federal tax rules.
South Carolina South Carolina retirees with 20 or more years of active duty can deduct up to $3,000 annually until age 65 and up to $10,000 per year after age 65.
South Dakota South Dakota does not have state personal income tax.
Tennessee Tennessee does not tax personal income; it taxes dividend and interest income only.
Texas Texas does not have personal income tax.
Utah Utah treats military retirement income as taxable income. A taxpayer of 65 may claim a non-refundable tax credit of up to $450.
Vermont Vermont taxes military retirement pay.
Virginia Virginia taxes military retirement pay.
Washington Washington does not have personal income tax.
West Virginia West Virginia waives up to $2,000 from taxes for military retirees.
Wisconsin Wisconsin does not tax military retirement pay.
Wyoming Wyoming does not have personal income tax.

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