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

Retirees from the uniformed services in multiple states will pay less in taxes for the 2025 tax year, in some cases thanks to grassroots lobbying efforts from MOAA members and affiliates.

Here’s a look at some of the changes taking effect, including states where retired members of the USPHS Commissioned Corps and NOAA Commissioned Corps may receive benefits on par with armed services retirees. Visit MOAA.org/statereport for a state-by-state list of tax policies. Have a tax policy change we should know about? Email editor@moaa.org with “State Tax” in the subject line; your information may be used for a follow-up article.

California

The state budget signed June 27 by Gov. Gavin Newsom exempts $20,000 of uniformed service retirement pay or survivor benefit pay from state taxes beginning with the 2025 tax year. It includes USPHS and NOAA officer retirees and was supported by multiple state veterans’ groups, to include MOAA’s California Council of Chapters (CALMOAA).

The legislation expires before the 2030 tax year. It is limited to those with federal adjusted gross income up to $125,000 (or $250,000 for joint filers).

[RELATED: How New Tax Laws May Impact Your Charitable Giving]
 

Georgia

A law signed May 13 by Gov. Brian Kemp increases the exemption for military retired pay to $65,000 for the 2026 tax year.

Prior law allowed retirees of all ages to exempt $17,500 of military retired pay annually, along with an additional $17,500 for those with a Georgia earned net income over that amount. Retirees 65 and over already can exclude up to $65,000 in all types of retirement income, and those ages 62 to 64 (along with disabled retirees) can exclude up to $35,000.

The military-retirement exemption does not apply to USPHS or NOAA Corps retirees.

Idaho

A law signed March 6 by Gov. Brad Little (and amended in April) expanded the state’s income tax exemption on military retired pay to those classified as disabled OR at least 62 years old at the end of the tax year OR worked enough during the tax year to file a federal return.

The deduction is limited to the maximum Social Security benefit, which varies by year. The new legislation does not specifically address USPHS or NOAA Corps retirees, but previous military-retirement exemptions have applied to those groups.

[RELATED: Tax Law Changes May Influence Your Year-End Money Moves]

Indiana

A law signed April 10 by Gov. Mike Braun expands the state’s military tax exemption to include retirees from the Space Force, along with retired USPHS and NOAA officers.

It also covers benefits paid to the survivors of those servicemembers, as well as the state’s active duty pay exemption. The bill covers the 2025 tax year, but it will expire July 1, 2028.

Maine

A law signed July 1 by Gov. Janet Mills expands the state’s retirement pay tax exemption to cover members of the Space Force as well as the USPHS and NOAA Corps. It takes effect with the 2026 tax year.

Testimony in support of the legislation included materials from Rear Adm. Joan Hunter, USPHS (Ret), a member of MOAA’s national board of directors and of the MOAA Southern Maine Chapter.

“USPHS officers have the same ethical standards and professional conduct requirements as our ‘sister services,’” Hunter wrote. “We are required to successfully train and maintain proficiency and readiness for deployment. We take the same oath of office as our Armed Service Members, earn the same military rank and pay grades, earn the same retirement pay and benefits, are covered by the GI Bill, are eligible for TRICARE military health care system, receive a formal discharge … and earn benefits for care by the Veterans Administration.”

[FROM MILITARY OFFICER MAGAZINE: Going All In on Retirement]

Vermont

A law signed June 25 by Gov. Phil Scott exempts military retirement income (to include USPHS and NOAA uniformed retirees) for those with a federal adjusted gross income of $125,000 or less.

Those with incomes above that threshold but less than $175,000 will receive a partial exemption. The change takes effect with the 2025 tax year and replaces state law offering a partial exemption to those with lower gross income levels.

Virginia

The 2023 state budget included increased tax exemptions, which moved from $20,000 in military retirement income in the 2023 tax year to $30,000 in 2024 and $40,000 in 2025 and beyond. 

The exemption does not apply to USPHS or NOAA uniformed retirees.