State Income Tax Exemptions on Military Pay
Many states exempt military pay, retirement pay, or VA disability compensation from state income tax.
Who qualifies: Active duty, Veterans, National Guard, Veterans with a service-connected disability.
State income tax treatment of military pay varies widely:
**States with NO income tax (best for military):**
• Texas, Florida, Nevada, Washington, Wyoming, South Dakota, Tennessee, Alaska – no state income tax at all
**States that exempt military retirement pay:**
• 29+ states fully exempt military retirement pay from state income tax
• Includes: Alabama, Arkansas, Connecticut, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Utah, West Virginia, Wisconsin
**VA Disability Compensation:**
• Exempt from state income tax in ALL 50 states (federal law)
Moving to a tax-friendly state at retirement can save thousands per year. Check your specific state's current laws as they change frequently.