Quick Answer
13 states offer full exemptions for military retirement pay, while 15 others provide partial deductions. Veterans can save $500-$3,500 annually depending on their state and retirement income. States like Florida and Texas have no income tax, while Pennsylvania fully exempts military pensions.
Best Answer
Robert Kim, Tax Return Analyst
Military retirees and veterans receiving retirement pay who want to understand their state tax obligations
Which states offer military retirement deductions?
Military retirement pay receives favorable tax treatment in 28 states total — 13 states offer full exemptions, 15 provide partial deductions, and 9 states have no income tax at all.
According to the Military Officers Association of America (MOAA), these tax benefits can save veterans between $500-$3,500 annually depending on their retirement income and state of residence.
States with full military retirement exemptions
These 13 states completely exempt military retirement pay from state income tax:
Example: Pennsylvania vs. California tax savings
Consider a military retiree receiving $45,000 annually in retirement pay:
Pennsylvania (full exemption):
California (no exemption):
States with partial deductions
These 15 states offer partial exemptions, typically based on age or income limits:
Key factors that affect your deduction
What you should do
1. Check your current state's military retirement tax policy using our state tax comparison tool
2. If you're planning to relocate, consider military-friendly states for tax savings
3. Ensure you're claiming all available deductions on your state return
4. Keep documentation of your military service and retirement pay amounts
Use our [return scanner tool](/tools/return-scanner) to verify you're claiming all military retirement deductions available in your state.
Key takeaway: 28 states offer some form of military retirement tax relief, with potential savings of $500-$3,500 annually depending on your income and state of residence.
Key Takeaway: 28 states offer military retirement tax benefits, with 13 providing full exemptions and potential annual savings of $500-$3,500 for veterans.
State military retirement tax treatment comparison
| State Category | Number of States | Tax Treatment | Potential Annual Savings |
|---|---|---|---|
| Full Exemption | 13 states | 100% exempt from state tax | $500-$3,500 |
| Partial Deduction | 15 states | Age/income limited exemptions | $200-$2,000 |
| No State Income Tax | 9 states | No state income tax at all | $1,000-$4,000 |
| No Military Benefits | 13 states | Fully taxable | $0 |
More Perspectives
Robert Kim, Tax Return Analyst
Military retirees age 55+ who may qualify for enhanced state tax benefits
Enhanced benefits for older military retirees
If you're 55 or older, you have access to significantly better military retirement deductions in many states. Age-based exemptions often provide larger deduction amounts or eliminate income restrictions entirely.
Age-enhanced deduction examples
Colorado: Under 55, no military deduction. At 55-64, you can deduct up to $24,000 of retirement income (including military pensions) if your AGI is under $75,000. At 65+, the income limit disappears.
Georgia: At 62-64, you can exempt up to $65,000 of retirement income including military pensions. This is one of the most generous programs nationwide.
Arizona: At 65+, you can deduct up to $2,500 of military retirement pay with no income restrictions.
Planning considerations for seniors
States with no income tax (best for retirees)
Nine states have no state income tax, making them automatically military-friendly: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Key takeaway: Military retirees 55+ often qualify for enhanced state tax benefits, with some states offering exemptions up to $65,000 annually.
Key Takeaway: Military retirees 55+ often qualify for enhanced state deductions, with some states offering exemptions up to $65,000 of retirement income annually.
Sources
- IRS Publication 525 — Taxable and Nontaxable Income
- Military Officers Association State Tax Guide — State-by-state military tax benefits
Reviewed by Robert Kim, Tax Return Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.