MOAA National serves in an advisory capacity for state-specific issues such as income tax exemption and state-level education benefits. Please contact your local MOAA council as state legislation must originate at the state level.  

The new year will bring new tax rules across the country, to include updates on how some states collect income taxes on military retirement pay.

Here’s a look at a few places where your tax bill could be changing. For full details on these tax changes and other tax rates at the state level, visit MOAA’s Military State Report Card and Tax Guide.

Delaware

Old: $12,500 of military retirement pay is excluded from state tax, regardless of the recipient’s age. Other Delaware retirees receive that same exclusion once they turn 60, but get a smaller one until then.

New: The figure won’t change, but more uniformed services retirees will be eligible to receive it. SB 329, a bill supported by MOAA’s Dover Chapter, defines “United States military pension” as payments received by not just DoD and Coast Guard retirees, but members of the commissioned corps of the U.S. Public Health Service and NOAA. It also clarifies that National Guard pensions fall under the exclusion. Gov. John Carney signed the bill Sept. 26.

[RELATED: These Tax Rules Will Expire in 2025]

New Mexico

Old: $30,000 of military retirement pay is exempted from state tax under a provision that had been set to expire in 2026.

New: That exemption will be permanent, thanks to HB 252, signed by Gov. Michelle Lujan Grisham into law in March. It also will expand to include surviving spouses, who were not covered by the initial legislation. MOAA members were part of efforts to move HB 252 forward, taking part alongside other veterans groups that make up the New Mexico Military & Veterans Leadership Council.

Montana

Old: A partial exemption for all types of retirement pay based on income level.

New: For the 2024 tax year, working military retirees will be able to exempt up to half of their military retirement income. Residency restrictions apply, and the exemption is set to expire in the 2033 tax year. Get full details at this link.

[RELATED: 5 Money Moves to Make When Interest Rates Are Falling]

Virginia

Old: The 2023 tax year includes a $20,000 exemption for military retirement pay.

New: The 2024 tax year includes a $30,000 exemption, which will move to $40,000 per year in 2025 and subsequent years. The change, supported by MOAA’s Virginia Council of Chapters, took effect as part of the state’s 2023 budget.