States Without Personal Income Tax
These states do not have a personal income tax, which means retirement and disability pay are not subject to state income taxes.
New Hampshire and Tennessee, tax only dividend and interest income.
States That Don’t Tax Military Retirement Pay
The following states do not tax retired military pay.
|Illinois||Massachusetts||New Jersey||West Virginia|
States With Special Military Retirement Pay Exemptions
The following states have special provisions for military or public pensions:
- The first $3,500 of military retirement pay is exempt.
- Military retirees ages 55 – 64 can exclude up to $20,000 in any one tax year from their retirement pay, those 65 and over can exclude up to $24,000.
- Up to $2,000 of military retirement excluded for individuals under age 60; $12,500 if 60 or older.
- Taxpayers over 62 or permanently disabled may be eligible for a $4,000 exclusion of retired pay.
- Tax-free for retirees 65 and older, or disabled retirees 62 or older.
- Up to $6,250 plus 25% of retired pay over that amount is tax-free for 2019. That will increase to 50% in 2020, 75% in 2021 and 100% for taxable years beginning after 2021.
- Up to $31,110 is tax-free, you may be able to exclude more in some situations.
- The first $5,000 is tax-free, that amount increases to $15,000 at age 55.
- Special rules see our Nebraska State Benefits Page.
- Only if you had at least 5 years active duty before August 12,1989
- The greater of 75% of your retirement pay or $10,000
- If you had military service before October 1, 1991 you may be able to deduct a portion of your retirement pay. If you didn’t have military or federal service prior to October 1, 1991, your military retirement is taxed normally.
- If you are under 65, up to $14,000 is tax-free. That amount increases to $27,000 at age 65.
*Contact Defense Finance and Accounting Service (DFAS) for assistance if you have issues with retired pay and state income tax, including changing your withholding amount.
|Defense Finance and Accounting Service|
|US Military Retirement Pay|
|8899 E 56 St|
|Indianapolis, IN 46249-1200|