States That Don’t Tax Military Retirement Pay in 2026

Most states have stopped taxing military retirement pay entirely, and the trend has only accelerated in the last few years. As of 2026, only two places in the country — California and Washington, D.C. — still tax it as ordinary income with no military-specific break. Here’s exactly where every state stands, and what’s changed recently.

The Short Answer: 37 States Don’t Touch It At All

Between states with no income tax whatsoever and states that specifically carve out military retirement pay, 37 states currently impose zero state income tax on military retirement income. Another 12 states offer a partial exemption, meaning some or all of your retirement pay is protected depending on your income level, age, or the specific exemption cap. That leaves just two jurisdictions taxing it fully as regular income.

States With No Income Tax at All (9 States)

These states don’t tax any earned or retirement income, military or otherwise, so military retirement pay is automatically untouched: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

States That Specifically Exempt Military Retirement (28 States)

These states do have a state income tax, but they’ve written a specific exclusion for military retirement pay into their tax code: Alabama, Arizona, Arkansas, Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, West Virginia, and Wisconsin. In these states, your military retirement pay is subtracted out before your state tax is calculated — you still file, but that income line doesn’t count against you.

States With Partial Exemptions — Read the Fine Print (12 States)

Colorado, Delaware, Georgia, Idaho, Kentucky, Maryland, Montana, New Mexico, Oregon, Utah, Vermont, and Virginia exempt military retirement pay only up to a dollar cap, only above a certain age, or only under some combination of both. This is the category where a generic “does my state tax military retirement” answer can mislead you — the exemption amount and the qualifying conditions are different in every one of these states, and several have changed their rules within the last two years.

The Two Places That Still Tax It Like Regular Income

California and Washington, D.C. are the only jurisdictions left that tax military retirement pay the same as any other income, with no military-specific exemption. If you’re weighing a move after retirement and state tax treatment of your pension matters to your decision, that’s worth knowing before you sign a lease.

Recent Changes Worth Knowing About

Two states adjusted their exemptions going into 2026 in ways that materially help retirees. Delaware now allows military pensions to be exempt up to $12,500 regardless of age — previously that exemption was limited to retirees 60 and older. Georgia significantly expanded its exemption, allowing veterans to exclude up to $65,000 of military retirement pay and removing the prior age restriction that had limited the larger exemption to veterans 62 and up. If you last checked either state’s rules more than a year or two ago, it’s worth a fresh look.

How Military Retirement Pay Interacts With VA Disability Pay

State income tax treatment of military retirement pay is a completely separate question from how VA disability compensation is taxed. VA disability compensation is exempt from federal income tax everywhere, and it’s not counted as taxable income by any state either — the state-by-state variation described above applies only to the pension/retired-pay portion, not to VA disability compensation. If you’re not clear on how your disability rating affects what you actually owe, see our guide on whether VA disability is taxable.

Property Tax Is a Separate Question From Income Tax

None of the above has anything to do with property tax exemptions, which are a completely different benefit administered at the state and often county level, frequently tied to your VA disability rating rather than your retirement pay. If you’re evaluating a move based on total tax burden, check both separately — our veteran property tax exemption by state guide covers that side of it.

What to Verify Before You Move or File

State tax rules on military retirement pay change often enough — Delaware and Georgia both moved in the last two years — that a list like this one is a starting point, not a substitute for checking the current year’s rule directly with the state’s department of revenue before you file or before you relocate based on the tax treatment. This is especially true if you’re in one of the 12 partial-exemption states, where a dollar cap or age threshold can change your actual tax bill significantly from what a general “yes, it’s exempt” headline implies.

How This Fits Into Your Broader Retirement Tax Picture

State income tax on your pension is one piece of a bigger picture that includes federal tax treatment, how your retirement pay is calculated in the first place, and how it interacts with any concurrent VA disability compensation you’re drawing. If you want the full mechanics of how military retirement pay itself is calculated, see our guide to how military retirement pay is calculated.

Key Takeaways

• 37 states impose zero state income tax on military retirement pay — 9 with no income tax at all, and 28 with a specific military retirement exclusion.
• 12 states offer only a partial exemption, capped by dollar amount, age, or both — check your specific state’s current threshold rather than assuming full exemption.
• Only California and Washington, D.C. still tax military retirement pay as ordinary income with no military-specific break.
• Delaware (2025) and Georgia (2026) both recently expanded their exemptions — Delaware removed its age requirement up to $12,500, and Georgia raised its cap to $65,000 and lowered the qualifying age.
• VA disability compensation is untaxed everywhere and is a separate question entirely from how your retirement pay is treated.

FAQ

Does this list apply to VA disability compensation too?
No. VA disability compensation is exempt from both federal and state income tax nationwide. The state-by-state variation above applies only to military retired pay (pension income), not disability compensation.

I live in a partial-exemption state — how do I find my exact cap?
Check your state department of revenue’s current-year military retirement exemption rules directly. Caps and age thresholds in the 12 partial-exemption states change periodically, as Delaware and Georgia both illustrate.

Is property tax treatment the same as income tax treatment?
No, they’re entirely separate benefits. A state can tax your retirement pay as income while still offering a generous property tax exemption tied to your VA disability rating, or vice versa.