Beginning in tax year 2016, taxpayers who receive certain types of military retirement pay (including pensions) may subtract that retirement pay from their taxable income. The tax exemption on military retirement pay is effective after December 31, 2015.
You qualify for this subtraction if your military retirement pay is:
• Taxable on the federal return, and
• Computed under U.S. Code, Title 10, sections 1401 to 1414, 1447 to 1455, and 12733.
Taxpayers who claim this subtraction may not claim the nonrefundable credit for past military service.
For tax years 2015 and earlier, military retirement pay (including pensions) is taxable.
For more information regarding this new law, visit the Military Pension page on our website. You can find information on military tax benefits on the Members of the Military page.