Introduction
The vast majority of states do not tax any military retirement pay, and roughly one quarter of the remaining states have limitations in place with regard to what military retirement pay is taxable. The United States Military offers a lifelong monthly annuity payment for military personnel who served for more than twenty years. This retirement plan, in comparison with other retirement plans offered to other portions of the U.S. population, is fairly generous.
How the state taxes military retirement directly affects the sum that retirees are allotted each month throughout the year. In 2022, there are only four states, including Washington D.C., that fully tax military retirement pay. Half of the states in the U.S. have a state income tax but do not tax any military retirement pay.
For the states that do tax military retirement benefits, many of them allow for a certain sum of their allotted benefits to remain untaxed. The amount of untaxed retirement pay ranges widely depending on in what state a person is living. Certain states only allow up to $2,000 to be tax exempt, dependent upon age, while others permit deductions up to $30,000 or more per year.
Scroll through the charts to learn more about how states tax military retirement.
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