The list of states that do not tax military retirement is one of the fastest ways to stretch a pension that took 20 years to earn. Nine states levy no individual income tax at all, and roughly a dozen more exempt military retired pay while still taxing wages and other income.
On a $60,000 pension, a 5% state income tax costs $3,000 a year — money that never reaches your bank account.
The catch is that these rules move constantly. Legislatures add exemptions, phase them in by age, and quietly let older provisions expire. A state that looked tax-free in a 2019 blog post may tax every dollar today, which is why any current list of states that do not tax military retirement needs a date stamp.
That is why a dated guide to states that do not tax military retirement is more useful than a ranking without sources.
This guide covers five things that actually decide your bill: the no-income-tax states, the full exemptions, the partial ones with age triggers, how to verify your own situation with primary sources, and the hidden costs that can erase the savings entirely.
It is written for retirees who want a practical answer on states that do not tax military retirement, not a slogan. The goal is not to collect every state on a list of states that do not tax military retirement, but to find the one that fits your pension, age, and property budget.
1. Start With the Nine States That Have No Income Tax
Nine states currently impose no individual income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. For anyone comparing states that do not tax military retirement, this group is the simplest starting point because the exemption question never comes up.
New Hampshire's limited tax on interest and dividends expired after the 2024 tax year, which is what moved it onto the list.
No income tax does not mean no tax bill. Texas and New Hampshire lean heavily on property taxes, and Washington applies a capital gains excise tax to very large investment gains. Alaska pays residents an annual permanent fund dividend, but food and fuel costs run well above the national average.
Among states that do not tax military retirement, the absence of an income tax is only the first line of the ledger. A map of states that do not tax military retirement can point you toward a region, but the county tax assessor decides much of the real bill.
A common scenario: a retiree leaves Virginia for Texas to escape income tax, then discovers a property tax bill on a $400,000 home that dwarfs what they saved. Run the property tax number before you fall in love with the income tax number.
The same discipline applies when you compare states that do not tax military retirement and find that one has lower housing costs but higher sales taxes. That is the practical test for states that do not tax military retirement: compare the full cost of living, not just the line labeled income tax.
How to apply this: look up the effective property tax rate for your target county, multiply it by your expected home value, and compare that figure to your current state tax bill. Keep the result beside your shortlist of states that do not tax military retirement so the tax-free label does not hide a higher overall cost.
That shortlist should include both no-income-tax states and states that do not tax military retirement through a full exemption, because the two paths produce different paperwork.
2. States That Exempt Military Retired Pay Outright
Roughly fifteen states collect income tax but exempt military retired pay completely. The group generally includes Alabama, Connecticut, Illinois, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, North Carolina, Ohio, Oklahoma, Pennsylvania, West Virginia, and Wisconsin.
Several of these also exempt most or all civilian retirement income, which matters if you plan to work or draw from a Thrift Savings Plan after service. These are the states that do not tax military retirement in the fullest sense: they still have an income tax, but they remove retired pay from the base.
For a retiree with a 20-year pension, states that do not tax military retirement in this category require a close read of whether the exemption is full or capped.
The exemption usually applies to retired pay reported on a 1099-R from the Defense Finance and Accounting Service. It does not always cover every related payment automatically, so read the state's instructions on what counts.
A careful reader of states that do not tax military retirement will check survivor annuities, disability retirement, and any civilian pay before assuming every dollar is exempt. The same caution applies to any online summary of states that do not tax military retirement, because a single footnote can change the answer.
| State approach | Examples | What to check |
|---|---|---|
| No income tax at all | Alaska, Florida, Texas, Wyoming | Property and sales tax rates |
| Full exemption of retired pay | Alabama, Illinois, Michigan, Wisconsin | Whether survivor annuities qualify |
| Age-triggered exemption | Several states | The exact qualifying age |
| Flat dollar deduction | Maryland, South Carolina | The annual cap and age rules |
| Taxed like ordinary income | California and others | Rules for other retirement income |
Knowing which bucket a state falls into answers most questions about states that do not tax military retirement before you ever call a revenue office.
It also helps you separate a full exemption from a deduction that phases out at a certain age, because both can appear on a loose list of states that do not tax military retirement without telling the same story.
How to apply this: find the state revenue department's official guidance on military retired pay, confirm whether the exemption is full or capped, and note any age or filing-status conditions.
Then compare that guidance with a second source about states that do not tax military retirement, ideally the state's own tax forms, so a blog summary does not become your only evidence. If the two sources disagree, trust the official form and note that even reliable lists of states that do not tax military retirement can lag a legislative session.
