Where you live can add hundreds a month back into your pension. Many states either have no income tax at all or fully exclude military retired pay from state taxes. Rules shift, so it’s smart to confirm details against a current state-by-state rundown.
One quirk to note: a few places achieve “no tax” by giving a credit that wipes out the bill, as Utah does via a formula tied to your retired pay. And New Hampshire finished phasing out its last personal income tax on Jan. 1, 2025, which keeps military pensions untouched.
1. Alabama
Retired pay goes further in Alabama because military retirement pay is fully excluded from state income tax. That simple rule helps fixed budgets, especially in counties where housing and property taxes are modest. Day to day, the bigger swing items are insurance and utilities, which vary by coastal versus inland zip codes. Healthcare access clusters around Birmingham, Huntsville, and Mobile; smaller towns trade proximity for lower costs. If you plan to keep working, wages are taxed, so treat real take-home pay (after commuting and insurance) as part of your decision.
2. Alaska
Alaska taxes none of your pension because there’s no personal state income tax. The tradeoff is cost: utilities, groceries, and flights can run high, and those numbers rise in remote areas. Healthcare access concentrates near Anchorage and Fairbanks; specialty care may mean travel. Weather drives budgets, too. Winter heating, vehicle maintenance, and gear add up. Many retirees like the balance of mid-sized communities with commissary access and reliable air links.
3. Arizona
Arizona is a favorite for retirees who want sun and breadth of services, and it helps that the state allows a full subtraction for military retired pay. Housing costs vary by metro and neighborhood, and sales taxes shift with city boundaries, so big purchases are worth planning. Healthcare networks are deep in Phoenix and Tucson; smaller cities offer calmer living with fewer specialists. If you keep working, the labor market is broad, from logistics to healthcare support to trades.
4. Arkansas
Budgets stretch in Arkansas because military pension income isn’t taxable at the state level. Housing and insurance are generally reasonable outside a few hot markets, and smaller cities can deliver good value without long commutes. Healthcare access is best around Little Rock, Fayetteville, and Jonesboro; in rural areas you’ll drive farther for specialists. Sales taxes and fees vary by locality, so check totals on vehicles and appliances before you buy.
5. Connecticut
High services meet a strong exemption in Connecticut, where military retirement pay is fully exempt from state income tax. That matters in a state where housing, car insurance, and property taxes can run above average. Healthcare access is excellent near Hartford, New Haven, and along the I-95 corridor. If you plan to keep working, wages are taxed at state rates, so stack that into your budget alongside commuting and parking.
6. Florida
Your pension stays intact in Florida because there’s no personal income tax. That’s the headline, but everyday costs decide how far the savings go. Insurance and HOA dues can run high in some coastal areas, and sales taxes vary by county. If you plan part-time work, commuting and parking can matter more than the rate you earn. Healthcare networks are broad in the big metros, with VA access around Jacksonville, Tampa, Orlando, and Miami. The practical win is picking a neighborhood where premiums, utilities, and groceries are predictable, not just sunny.
7. Hawaii
Hawaii exempts most employer-funded pensions, and military retired pay falls in that bucket under long-standing state rules for pension distributions from employer plans. The break helps, but island costs still steer the budget. Groceries, utilities, and housing run higher than the mainland, and inter-island travel adds another bill. Healthcare access is strongest on O‘ahu and Maui; specialty care on smaller islands can mean flights. If you keep working, job markets skew toward tourism, construction, healthcare, and public services, often with irregular schedules that affect transit and childcare for multigenerational households.
8. Illinois
Illinois leaves military pensions alone by allowing a subtraction for retirement income, which means your retired pay isn’t taxed. That’s a clear win on the income side. Property taxes can offset it, especially in some collar counties, so house hunting is where you protect the advantage. Healthcare networks are deep around Chicago and solid in regional hubs like Peoria and Springfield. If you’ll work part time, city wage taxes don’t apply here, but commuting costs can eat savings if you chase jobs across the metro.
9. Indiana
Indiana treats military retirement favorably, allowing the full deduction so your retired pay is not taxed. That keeps the income picture simple. Housing is generally affordable outside a few hot zip codes in Indianapolis and the college towns. Utilities, insurance, and groceries stay manageable in most counties. If you plan to keep working, flat state rates mean easy math, and a lot of second careers land in logistics, healthcare support, advanced manufacturing, and the trades.
10. Iowa
Iowa broadened its rules so qualifying retirement income is excluded, which makes military retired pay free from state tax for eligible filers. That change puts more focus on housing, insurance, and winter utilities. Smaller cities offer good value and short commutes; farm-adjacent counties add wind and hail considerations for roofs and autos. Healthcare is strongest around Des Moines, Iowa City, and the larger river metros, with solid referral networks for specialty care.
11. Kansas
Budgets are simpler in Kansas because military retired pay is subtracted from state taxable income. That keeps the focus on housing, insurance, and commuting instead of line items on a return. Property taxes vary by county, so house hunting matters more here than in many states. Healthcare access is strongest around Wichita, Kansas City, and college towns; smaller communities trade specialists for shorter lines and lower prices. If you plan to keep working, the logistics, healthcare support, and public sector job markets are steady and predictable across much of the state.
12. Louisiana
Retired pay stretches in Louisiana because federal pensions, including military, may be excluded from state income. That’s a big help in a place where insurance, storm prep, and repairs can drive real dollars, especially near the coast. Ports, petrochemical plants, and refineries anchor many jobs if you plan to work part time. Healthcare access is best around New Orleans, Baton Rouge, Lafayette, and Shreveport; rural parishes mean longer drives for specialty care. Sales taxes add up once parish and local rates stack, so price major purchases with the full total in mind.
13. Maine
Maine treats military pensions well: benefits under a military retirement plan are fully exempt from state income tax. That puts attention on winter utilities, insurance, and distance to care. Housing prices swing between coastal towns and inland counties, and heating is a real line item from late fall through early spring. Healthcare access is strongest around Portland, Bangor, and Augusta, with longer drives in the north and Down East. If you plan to work, part-time roles cluster in healthcare, schools, logistics, and trades.
14. Massachusetts
Military retired pay isn’t taxed here; beginning in 1997, uniformed services pensions are exempt from Massachusetts income tax. That’s a big help in a state where housing, car insurance, and local fees can run high. The real budget levers are town-by-town: property taxes and services vary, and winter costs (heating, parking, snow logistics) add texture. Healthcare access is excellent around Boston, Worcester, and Springfield, with specialists close and referrals fast. If you’ll keep working, the market is deep but commutes and parking can eat savings, so proximity matters as much as pay.
15. Michigan
Michigan leaves military retirement off the table; military retirement benefits are exempt from state income tax. That puts the focus on housing, insurance, and winter utilities. Costs are reasonable in most metros, and lake communities draw retirees who value space and access to care. Healthcare networks are broad around Detroit, Grand Rapids, Lansing, and Ann Arbor. If you plan to work part time, flat municipal rules and potential city income taxes are worth a quick check before you accept an offer downtown.
16. Minnesota
Your military pension doesn’t get taxed here because Minnesota lets you take a military pension subtraction on your return. That’s meaningful in a state with real winters and strong, but sometimes spread-out, healthcare networks. The Twin Cities and Rochester offer deep specialty care; smaller towns trade selection for shorter lines and calmer traffic. If you’ll keep working, opportunities in healthcare support, education, and advanced manufacturing are steady, though commutes can expand fast if you pick the wrong suburb.
17. Mississippi
Mississippi treats military retirement kindly. Veterans’ retirement pay isn’t taxable on the state return. That helps in a state where housing is affordable but access to specialty care can mean longer drives outside larger cities. Insurance and storm exposure along the Gulf influence budgets, while inland counties often offer calmer premiums. If you’ll keep working, wages are taxed, but commuting times are manageable in most areas.
18. Missouri
Missouri lets your military pension be subtracted from Missouri taxable income, which keeps retired pay intact. That shifts attention to property taxes, insurance, and commuting. Costs are moderate across much of the state, with solid healthcare in St. Louis, Kansas City, Springfield, and Columbia. If you plan a second career, logistics, manufacturing, and public-sector roles are common; just weigh parking and freeway time against the pay bump for downtown jobs.
19. Nebraska
Nebraska treats military pensions simply: beginning with the 2022 tax year, military retirement benefits are fully excluded from state taxable income. That puts the spotlight on property taxes, insurance, and everyday costs instead of your pension. Housing is reasonable in many communities, with the biggest swings tied to school districts and amenities. Healthcare access is strongest around Omaha and Lincoln; smaller towns trade specialists for shorter lines and lower prices. If you plan to keep working, wages are taxed at graduated rates, so treat real take-home pay (after commuting and insurance) as part of your plan.
20. Nevada
Nevada doesn’t tax personal income, so your pension stays whole by default; the state’s own guidance is clear that there’s no individual income tax. That headline is powerful, but the day-to-day budget hinges on insurance, HOA dues, and utilities, which vary widely across the Las Vegas Valley, Reno-Sparks, and rural counties. Healthcare access is concentrated in the larger metros with growing networks around VA clinics. If you’ll work part-time, commuting patterns and parking can matter more than the wage rate.
21. New Hampshire
New Hampshire doesn’t tax W-2 wages and, as of 2025, the last holdout on investment income is gone . The tax on dividends and interest was repealed for 2025. For retirees, that means pension income isn’t touched by a state income tax. The big budget levers are property taxes (set locally) and winter utilities. Healthcare access is solid near Manchester, Nashua, Concord, and along the Massachusetts border; northern towns trade quieter living for longer drives to specialists. If you plan to work part-time, commutes and parking can outsize the tax discussion.
22. New Jersey
Retired pay from uniformed service isn’t taxed in New Jersey; state guidance states that military pension payments aren’t included on the return. That makes the budget conversation about housing, property taxes, and insurance. Costs swing a lot by county, with the highest levies in some suburbs and calmer bills elsewhere. Healthcare access is excellent near major corridors and VA facilities, which helps if you need specialists. If you keep working, wages are taxed at progressive rates, so check take-home pay against commuting and parking.
23. New York
New York treats military pensions generously. Payments to retired service members are totally exempt from state and local income tax. That’s meaningful in a state where housing, insurance, and tolls can add up, especially downstate. Healthcare networks are deep in the city and strong in regional hubs like Albany, Syracuse, Rochester, and Buffalo. If you’ll work part-time, factor city wage taxes where they apply and the real cost of commuting or parking into the offer you accept.
24. North Carolina
Budgets are easier to forecast in North Carolina because military retirement income is fully deductible on the state return. That shifts the real work to housing, property taxes, and commuting. Costs swing by county, with the Triangle and Charlotte pricier than many coastal or mountain towns. Healthcare access is strong in major metros and around large bases, which helps if you need specialty care or regular VA appointments. If you’ll keep working, wages are taxed at a flat rate, so the budget question is less about brackets and more about mileage, parking, and insurance.
25. North Dakota
Pension math is straightforward here: North Dakota’s return includes a specific line for the military retirement benefit exclusion. That clarity lets you focus on where to live, not how to file. Housing is generally affordable, but winters shape budgets. Heating, snow tires, and a garage or covered parking are real money savers. Healthcare access is best around Fargo, Bismarck, Minot, and Grand Forks; smaller towns trade specialists for shorter lines and familiar faces. If you plan to work part time, energy, healthcare, and public services anchor a lot of hiring.
26. Ohio
Ohio treats uniformed service pensions well, because military retirees can deduct retirement pay on the state return. That makes housing, property taxes, and local commuting the big variables. Costs vary widely between the “Three Cs” (Columbus, Cleveland, Cincinnati) and smaller cities, with some towns adding municipal income taxes on wages if you keep working. Healthcare networks are deep in the big metros and solid in university towns, so access is usually about drive time, not availability.
27. Oklahoma
Retired pay stays whole in Oklahoma because, starting with tax year 2022, each filer may exclude 100% of military retirement benefits. Housing is affordable in many counties, and healthcare access is strongest around Oklahoma City and Tulsa. Weather is the swing factor. Hail, wind, and tornado risk can move insurance quotes quickly, and roof condition matters. If you plan to keep working, logistics, aerospace, healthcare, and public-sector roles are steady across the state, with commutes that are typically manageable.
28. Pennsylvania
Pennsylvania leaves uniformed services pensions off the table; retired or retainer pay isn’t taxable when paid after you’ve met plan eligibility rules. That state policy helps in a place where local wage taxes and property levies can vary by municipality. Healthcare networks are strong across the larger metros and regional hubs, so access is usually decent once you pick a county. If you’ll keep working, check whether your town levies a local wage tax and how that affects take-home pay.
29. Rhode Island
Retired pay goes farther in Rhode Island because, starting with the 2023 tax year, military service pensions are fully exempt from state income tax. That helps offset higher housing and insurance costs in coastal towns. Healthcare access is a plus around Providence and the I-95 corridor, where major hospitals sit close together. If you plan to keep working, wages are taxed at normal rates, so run take-home pay against parking and tolls. Property taxes vary by municipality and school district, which means the right zip code matters as much as square footage.
30. South Carolina
The income side is simple here: individuals can deduct all military retirement income included in South Carolina taxable income. That keeps your focus on housing, insurance, and commuting. Costs vary widely between the Lowcountry, Midlands, and Upstate. Healthcare networks are strong in Columbia, Charleston, and Greenville, and veteran communities are active around major bases. If you keep working, wages are taxed at graduated rates, so add commuting and parking before you accept an offer.
31. South Dakota
Budgets are straightforward because South Dakota does not impose a state income tax. Your pension is untouched, so the real work is housing, utilities, and weather planning. Winters are serious on the plains. Heating, snow tires, and a garage or carport add real value. Healthcare access is strongest around Sioux Falls and Rapid City, with reliable referral paths to specialists. If you plan to work part time, schedules tend to be predictable in healthcare support, schools, and logistics.
32. Tennessee
Your pension stays whole because Tennessee has no individual income tax on wages or pension income, and its old investment income tax is gone. That shifts attention to sales taxes, insurance, and housing. Big metros offer deep healthcare networks and veteran services, while smaller towns trade selection for lower prices and easier parking. If you keep working, the commute often matters more than the rate you earn. Summers are hot, so cooling is a real line item in Middle and West Tennessee.
33. Texas
Texas leaves your pension alone because Texans pay federal income taxes but not state or local income taxes. Costs hinge on housing, insurance, and utilities, which swing by region and school district. Healthcare access is excellent in the big metros and good in many midsized cities. If you keep working, commuting and tolls can eat savings fast, so run those routes at rush hour before you choose a neighborhood. Property taxes are a major line item, and they vary by county and district.
34. Utah
Utah keeps pension math simple for retirees by using a military retirement credit that equals the state tax rate times your taxable retired pay, which effectively wipes out the bill. That means your budget hinges on housing, insurance, and the cost of getting around, not income tax. Healthcare access is solid along the Wasatch Front, with strong hospital networks and VA clinics. If you plan to work part time, wages are taxed at a flat rate, so your take-home depends more on commute, parking, and hours than on bracket jumps. Outdoor perks are real, but they come with HOA rules and winter maintenance in some mountain neighborhoods.
35. Washington
Your retired pay stays whole because Washington has no personal income tax. That puts attention on sales taxes, housing, and insurance, which swing a lot by county. Healthcare access is excellent around Seattle, Tacoma, and Spokane, with specialty care close and VA options nearby. If you plan to keep working, job markets are broad in tech, healthcare, education, and logistics, but commuting and parking can be the budget killers. Property taxes are local, and some cities add business and occupation taxes that can touch side gigs.
36. West Virginia
West Virginia treats uniformed service retirees well: starting in 2019, all military retirement income is exempt from state income tax. That shifts the focus to housing, utilities, and insurance. Costs are moderate across much of the state, and outdoor access is a plus if you like small-town living. Healthcare networks are strongest around Charleston, Huntington, and Morgantown; rural counties mean longer drives for specialists. If you plan to work part time, wages are taxed, so weigh commuting time and parking against the rate you earn.
37. Wisconsin
Wisconsin leaves your service pension alone; the state says retirement payments from the U.S. military system are exempt from Wisconsin income tax. That clarity helps in a place with real winters and strong healthcare networks. Housing is reasonable in many metros, and lake towns draw retirees who value space. If you keep working, wages are taxed, and a few cities levy their own income taxes, so check take-home pay against commuting and parking. Utilities, snow tires, and garage space become real line items when the cold sets in.
38. Wyoming
Wyoming doesn’t tax personal income, and the paperwork trail shows why: the state’s income-tax statutes were repealed long ago. That leaves housing, utilities, and insurance as the big levers. Costs run lower outside boom areas, and healthcare is concentrated in Cheyenne, Casper, and a handful of regional hubs. If you plan to keep working, wages aren’t touched by a state income tax, so your budget depends on miles, weather, and how often you hit the road.
Methodology & Sources
This list covers states that either have no personal income tax or fully remove state income tax from military retired pay. We started with a current, plain-English state comparison and cross-checked edge cases against primary state materials. For 2025 changes that affect retirees broadly, we noted New Hampshire’s repeal of its interest and dividends tax, and we confirmed Utah’s “net-zero” treatment via its military retirement credit formula.
To validate specific “full exemption” states, we consulted official pages such as Massachusetts’ guidance on government and military pensions, Maine Revenue Services’ 2025 legislative update, and New Jersey’s military pension rules. We also reviewed Pennsylvania’s Personal Income Tax Guide, South Carolina’s military retirement deduction FAQ, and Oklahoma’s military retirement exclusion. For North Carolina’s exemption, we referenced the state’s military retirement deduction page. Finally, we kept an eye on updates from service-member organizations like MOAA when laws changed and then verified those against state sites.
