What are the states that don’t tax active duty military pay? Read on to find out.
Here’s a round up of all the states that don’t tax military retirement pay or social security. Some of the tax laws are complex, but this usually depends on the state. However, the laws vary from one state to another. Also, depending on the state where you live, you might not need to pay state income tax or find that your military retirement pay or social security is up to a certain dollar amount exempted from taxation.
Out of the 50 states, nine of them don’t have personal income taxes, 13 states don’t tax the whole amount, retirement pay is not subject to tax in 25 states while 3 states tax retirement pay fully.
States that Don’t Tax Military Retirement Pay
Here are some of the states that don’t charge income tax on military retirement pay since they don’t collect state income tax:
- South Dakota
- New Hampshire – interest taxes and dividends only
States That Have Income Tax but Don’t Tax Military Retirement Pay
- West Virginia
- New Jersey
- North Dakota
- North Carolina
- New York
Military retirees in these states are usually encouraged to change their withholding income tax to zero on www.dfas.mil/retiredmilitary.
RELATED: North Carolina Military Retirement Tax Exemption
States that Tax Military Retirement Pay Fully
These states don’t have a specific exemption when it comes to income tax on military retirement pay.
States With Special Provisions on Tax for Military Retirement Pay
Military retirees 60 years and above exclude amounts up to $12,500 while those who are 60 years and below exclude up to about $2,000 of their military retirement pay.
Military retirees can be exempted from state income taxes up to $24,000 depending on their age.
Georgia usually has provisions for all retirement income and the military retirement pay is no exception. Taxpayers 62 years and beyond, totally and permanently disabled notwithstanding age, are eligible to adjustment of retirement income on their tax return in Georgia. $65,000 for 65-year-olds and older and $35,000 for those between the age of 62 and 64.
Military retirement pay is usually exempted from state income taxation for those above the age of 62 up to $3, 000.
Military retirement pay is not subject to income taxation for those who retired before 1997. If the military retirement pay is above $31, 110 then it’s subject to tax. This applies to those who retired after 1997.
For single filers, up to $34, 332 of retirement benefits inclusive of military retirement pay and $51, 498 for joint filers, 65 years and older, those who are 62 years or older and the disabled are exempted from state income tax. The deductions are usually made by retirement benefits and paid under the Tier 1 Federal Railroad Retirement Act or the Federal Social Security Act. The total for the maximum deductions is different for each year.
The graduated system starts with income that below $ 36,420. If the income is above $ 36, 420 85% of the benefits will be subject to taxation.
The first $5,000 is usually not subject to state income tax when it comes to military retirement pay. The totally disabled, or with a spouse that’s disabled and retirees above the age of 65 receive extra tax breaks on their income. However, it’s different for every year.
In South Carolina, military retirees that served for at least 20 years are exempted from state income taxation for up to $3,000 until they get to 65 years. After surpassing this age, the exemption is usually about $10,000.
65-year-olds and above who are low-income taxpayers are exempted up to $8,000 of state income tax and phases out gradually at $51, 000 joint filers and $28, 500 for single filers. Those above the age of 100 are exempted from all state income taxes.
Retirees with a federal AGI below $ 83, 450 for single filers and $ 104, 350 for joint filers and those that have reached their Social Security retirement age are exempted from state income tax up to $ 15,000.
The military retirement pay for this state is exempted up to $10,000 or 75%, the greater value between the two. However, it cannot go beyond the gross income of the federal.
Most military retirees in this state usually qualify for the federal pension exemption. The residents who are said to have special cases are put into consideration since the state taxes their military retirement pay as regular income.