States that have abolished income tax on military retirees

Military service is hard work and many military personnel spend a lot of time away from their families and risk their lives. However, there are service-related perks, and five states have recently added a new veterans benefit, the elimination of taxes on military retirement income. They are not the first states to do this, but they are the most recent. If you need help managing your retirement – whether you’ve served in the military or not – consider finding a professional with SmartAsset’s free financial advisor matching service.

States no longer tax military retirement income

The most recent states to enact legislation to exempt military retirement income from taxation are:

• Arizona

• Utah

• Indiana

• Nebraska

• North Carolina

The law takes effect immediately in Arizona and Utah and will go into effect in tax year 2022 in Indiana, Nebraska, and North Carolina.

Thus, military retirees from Arizona and Utah can receive a large tax refund when filing this year’s tax return for the 2021 tax year.

States that no longer taxed military pensions

The following states no longer tax military pensions at all: Alabama, Connecticut, Hawaii, Illinois, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, New York, North Dakota, Ohio, Pennsylvania, West Virginia, and Wisconsin .

In addition, the following states only partially tax military retirement income while allowing some exemptions or exemptions: Colorado, Delaware, Georgia, Idaho, Kentucky, Maryland, New Jersey, Oklahoma, Oregon, and South Carolina.

Finally, some states do not tax any income, including military benefits: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

bottom line

Military veterans in Arizona, Utah, Indiana, Nebraska, and North Carolina no longer have to pay income tax on their military retirement benefits, joining a number of other states that do not tax those payments. Veterans in Arizona and Utah will be able to receive refunds for the 2021 tax year, while the other three states will have the law effective from 2022.

The story goes on

Retirement Planning Tips

• A financial advisor can help make retirement savings less stressful. Finding a qualified financial advisor is not difficult. The free SmartAsset tool matches you with up to three financial advisors in your area, and you can interview your advisors for free to decide which one is right for you. If you’re ready to find a consultant to help you reach your financial goals, start now.

• The best way to plan for retirement is to use a workplace retirement plan such as a 401(k) if you have access to one. If not, consider opening an Individual Retirement Account (IRA).

• Are you a veterinarian looking for the best place to retire? Taxes may not be the only factor to consider. Take a look at SmartAsset’s study of the best cities for military retirees and our study of the best states for veterans.

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The post “These Five States Just Removed Income Tax on Military Retirees” first appeared on the SmartAsset blog.