What states don't tax military retirement is one of the most consequential questions a service member can ask before choosing where to settle. The answer surprises many: a large group of states offers at least partial relief, and a handful exempt retired pay entirely.
The difference between a taxed and untaxed state can run into thousands of dollars each year, depending on your pension size and your other income.
The problem is that the rules keep shifting. Several states have phased out their military retirement taxes in recent years, while others apply age thresholds, income caps, or caps on the exempt amount. A state you dismissed five years ago may now be the best fit for your budget.
This guide breaks down the current landscape, explains the fine print behind "no tax" claims, and gives you concrete steps to verify your own situation before you move.
The States That Exempt Military Retirement Pay Entirely
A core group of states imposes no income tax at all on military retirement, and several more exempt retired pay specifically. According to the Tax Foundation, nine states levy no individual income tax whatsoever, and those states naturally do not tax military pensions. That list includes Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
Beyond those, additional states with an income tax still exempt military retirement pay in full or in practice. States that have moved to full exemption include Arkansas, Connecticut, and Arizona, each of which enacted changes in recent years.
Because what states don't tax military retirement changes with each legislative session, you should treat any list as a snapshot, not a permanent guarantee.
The practical takeaway: confirm the rule for the current tax year directly with the state's department of revenue.
A quick call or a look at the official tax forms will tell you whether retired pay is excluded before you commit to a move, and a short checklist of what states don't tax military retirement is worth keeping on hand as you narrow your options.
States With Partial Exemptions and Age Requirements
Many states do not tax military retirement in full but still offer meaningful breaks, often tied to age or income. These partial exemptions are where most confusion lives, and they are the reason a simple yes-or-no list can mislead you.
Consider Missouri, which offers a deduction on military retirement that phases in based on age and income. A common scenario is a retiree who assumes "no tax" applies to the whole pension, only to discover a cap on the exempt amount. The same pattern appears in states that exempt a fixed dollar figure rather than the entire benefit.
- Age-triggered exemptions: some states exclude retired pay only after you reach a certain age, often 55, 60, or 62.
- Income-capped exemptions: the exclusion shrinks or disappears above a set adjusted gross income.
- Fixed-dollar deductions: a flat amount is excluded, and anything above it is taxable.
These nuances mean that what states don't tax military retirement is rarely a clean binary. The right move is to read the actual deduction worksheet for your state and plug in your real numbers.
Retirees who compare what states don't tax military retirement side by side often find that a partial exemption in a low-cost state beats a full exemption in an expensive one.
How to Verify Your State's Military Retirement Tax Rules
Verification beats rumor every time, and the primary source is your state's revenue department. The IRS explains the federal treatment of military retired pay in IRS Publication 525, which confirms that retired pay is generally taxable at the federal level, so state rules are where the real savings appear.
Here is how to check your situation in a few minutes:
- Search your state revenue department's site for "military retirement deduction" or "retired pay subtraction."
- Download the current year's individual income tax instructions and find the subtraction schedule.
- Note any age, income, or service-related conditions attached to the exemption.
- Cross-check with a tax professional if your income is near a phase-out threshold.
A useful authority here is the Military Officers Association of America, which tracks state tax policy and publishes updates when legislatures change treatment of retired pay. MOAA's state tax guides are a reliable secondary check when official forms feel dense, and they often summarize what states don't tax military retirement in plain language.
The practical step is to save a PDF of your state's instructions each year, because what states don't tax military retirement can shift with a single bill.
Comparing High-Value States for Retirees
Not all tax-free states are equal once you factor in property taxes, cost of living, and other levies. A state with no income tax may recover revenue through higher property or sales taxes, so the headline "no tax" can hide a bigger bill elsewhere.
| State | Military retired pay | Watch for | Action to take |
|---|---|---|---|
| Texas | Exempt | Higher property taxes | Compare county property rates |
| Florida | Exempt | Insurance and housing costs | Get homeowner quotes first |
| Nevada | Exempt | Sales tax on goods | Estimate annual spending |
| Arizona | Full exemption | Rapid growth in costs | Check current statute |
| Arkansas | Full exemption | Lower median incomes | Verify deduction form |
Use this table as a starting filter, not a final answer. The key insight is that what states don't tax military retirement only tells part of the story; total tax burden and living costs decide whether you actually save.
Run your own numbers across two or three candidate states before you pack, and rank what states don't tax military retirement alongside each state's overall affordability.
Common Mistakes That Cost Retirees Money
The biggest error is assuming a state's policy is fixed. Legislatures adjust exemptions regularly, and a rule that favored you at 55 may not apply the same way at 65. Relying on a blog post from several years ago is a recipe for a surprise tax bill.
Another frequent mistake is ignoring residency requirements. Claiming a state as your domicile while spending most of the year elsewhere can trigger scrutiny from both states. You need genuine ties—driver's license, voter registration, and a physical home—to make the claim stick.
A final trap is overlooking how disability pay is treated differently from retirement pay. Many states exempt disability compensation even when they tax retired pay, so the mix of your benefits matters. Understanding what states don't tax military retirement means separating these categories before you estimate your savings.
The immediate action item: list each component of your income (retired pay, disability, survivor benefits) and check the treatment of each one in your target state. Retirees who guess at what states don't tax military retirement instead of verifying often overpay for years without noticing.
Frequently Asked Questions About what states don't tax military retirement
Do any states tax military retirement but exempt disability pay?
Yes, several states treat these differently. A state may tax retired pay while fully exempting disability compensation, which is common because disability benefits already receive favorable federal treatment. If a large share of your income is disability-based, your effective state tax bill could be far lower than a simple "taxed state" label suggests.
Always check what states don't tax military retirement against your specific income mix rather than assuming a blanket rule.
How does moving mid-year affect my state taxes?
Most states tax you as a part-year resident, which means you file in both states and allocate income by residency period. A scenario many retirees hit is a move in December, expecting the entire year to be untaxed in the new state. In practice, only income earned while you were a resident of the no-tax state escapes that state's rules.
Plan your move date with this in mind when researching what states don't tax military retirement.
Does survivor benefit income follow the same rules?
Not always. Survivor Benefit Plan payments and Dependency and Indemnity Compensation can be classified differently from retired pay, and some states that exempt retired pay still tax survivor payments or vice versa. A surviving spouse should verify the specific treatment of each benefit type.
This is one of the least-discussed angles of what states don't tax military retirement, and it matters most for households relying on survivor income.
Can I keep my current state's residency after I move?
Only if you maintain genuine domicile there, which usually requires a physical home, ties, and limited time elsewhere. States audit this aggressively when they suspect tax avoidance. Claiming residency in a no-tax state while living primarily in a taxed one can lead to back taxes and penalties.
Verify the domicile rules before you rely on what states don't tax military retirement to reduce your bill.
Do these exemptions apply to federal civilian retirement too?
Rarely. Military retirement exemptions are usually written specifically for uniformed service retired pay, not for federal civilian pensions or private retirement accounts. A retiree with both military and civilian service should expect different treatment for each stream. Read the statutory language carefully, because what states don't tax military retirement often excludes other retirement income entirely.
Conclusion
The short version is that a meaningful group of states exempts military retirement pay, but the details decide your real savings.
- Nine states have no income tax at all, and several more exempt retired pay specifically.
- Many states offer partial relief tied to age, income, or a fixed dollar cap.
- Property taxes and living costs can erase the benefit of a "no tax" state.
- Rules change often, so verify against official state forms each year.
Your next step is simple: pick your top two candidate states, download their current income tax instructions, and run your actual numbers before you commit to a move. Getting what states don't tax military retirement right today can protect thousands of dollars in retirement income for years to come.
