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In 2022, six more states have joined the ranks of those exempting, or partially exempting, military retirement pay from state income tax liability. The move means that nearly 300,000 more military retirees across the nation are now exempt from state income tax.
This year, legislators in New Mexico, Oklahoma, Rhode Island, South Carolina, Vermont and Virginia passed laws giving retirees in those states tax breaks based on their military service.
Here’s how the military retirement legislation shapes up:
- New Mexico: Beginning in 2022, up to $10,000 of military retirement is tax free. That amount increases to $20,000 in 2023, and to $30,000 until at least 2026, according to a governor’s press release.
- Oklahoma: Military retirement income is fully tax free beginning in 2022, according to a state Senate press release.
- Rhode Island: Military retirement income is fully tax free beginning in 2022, according to a governor’s press release.
- South Carolina: Military retirement income is fully tax free beginning in 2022, according to a state government press release.
- Vermont: Beginning in 2022, up to $10,000 in retirement income is tax free for those with a gross income less than $50,000 for single filers or $65,000 for joint filers, according to a state legislature press release.
- Virginia: In 2022, up to $10,000 in retirement pay is tax free for retirees 55 and older. That amount increases by $10,000 each year until 2025, when up to $40,000 is deductible, according to a state assembly press release.
This leaves only California and the District of Columbia fully taxing military retirement income.
Many states also exempt active-duty military pay as well as social security benefits from income tax. See our State Tax Information for Military Members and Retirees page for details.
Also, retirees, veterans and dependents are often eligible for special state benefits such as property tax breaks, emergency loans, free education, employment training, hiring preference or other free government services. In some cases, you do not need to be a state resident to take advantage of these benefits. Check out our State Benefits section for information that can help you out.