Two More States Exempt Mil Rtmt Pay: AZ, NE

Capt MJ

Formerly Known As Attila The Hunnette
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Copied and pasted from my MOAA Newsletter, a 7/6/2021 article by Amanda Dolasinski.

“Military retirees in Arizona scored a victory June 30 when Gov. Doug Ducey signed the state’s budget legislation into law, totally exempting military retirement from state income tax.



“MOAA across our state has been in the lead here,” said Lt. Gen. John Regni, USAF (Ret), a member of MOAA’s board of directors. “A huge success that will surely lure even more military retirees to Arizona for second careers and eventually retirement.”



The exemption went into effect July 1 and is retroactive to Jan. 1.


Regni said MOAA members dialed up the pressure by meeting with lawmakers and the governor (and with then-Gov. Jan Brewer and her staff earlier in previous years) to discuss the legislation. He lauded several MOAA members who led efforts, including Lt. Col. Darren Venters, USAF (Ret), who energized members to meet with lawmakers and persistently led efforts over the last decade, and Col. Pete Kloeber, USAF (Ret), state MOAA chair, who organized chapter involvement.



Arizona first cut a break to military retirees – and first responders – on state income tax in 1989 by offering exemptions up to $2,500. In FY 2019, the exemption increased to $3,500.



The exemption was proposed in the state’s 2020 budget but was not included in the final version of the budget.”
 
New Jersey is a highly taxed state BUT, military retirement is not taxed and Vets get a partial exemption on other income as well. A local friend who is my state rep who also went to Hudson High ( ;) ) is pushing for more benefits. Currently fully disabled vets are exempt from NJ Property tax which are often $10K or more. He recently introduced a bill to provide proportional property tax exemption for vets who are rated below 100% so that a 50% disabled vet would be exempt for 50% of property tax, etc.
 
NICE!!!!! This is something I can applaud Ducey for signing. I am happy for current military retirees and what this means for their pocketbooks and quality of life. And for those who choose to retire in our fine state moving forward.
 
AZ is back on my list should I ever uproot from MD. I have to see either mountains or large bodies of water on a daily basis.

MD is working hard on getting the full exemption from state income tax. The excluded amounts of taxable pay have increased each year, and various groups continue to work for the legislation each year. My DBIL and DSIL, one a military retiree and one a Fed retiree, moved from VA to just over the border in PA to take advantage of their full exemption of Fed and military retirement pay.

I like the states where this exclusion exists, over no income tax at all, because states have to get their funds from taxing a range of things.

MD also has the exemption from property tax for 100% rated disability.
 
Well, I can't help you out with large bodies of water, but I can see 9400, 9200, and 9456-foot peaks from my desk at work. And if I walk outside I can see the tip of a 10,000-foot peak to the North East and another 9700-foot peak to the South. And more than half of North America's birds can be found here at different times of the year.

Add to that the newly exempt tax status? Golden. Then, you throw in the more than 20 wineries within 20 minutes of me and it's like the cherry on top of the sundae.
 
Well, I can't help you out with large bodies of water, but I can see 9400, 9200, and 9456-foot peaks from my desk at work. And if I walk outside I can see the tip of a 10,000-foot peak to the North East and another 9700-foot peak to the South. And more than half of North America's birds can be found here at different times of the year.

Add to that the newly exempt tax status? Golden. Then, you throw in the more than 20 wineries within 20 minutes of me and it's like the cherry on top of the sundae.
From your posts, you must be in northern AZ. DD is at NAU (not ROTC).
 
From your posts, you must be in northern AZ. DD is at NAU (not ROTC).
Actually extreme Southern portion of the state. Our DS thought the campus of NAU was beautiful when he toured it.
 

9 States Don’t Tax Military Retirement Pay (because they don't have state personal income tax)
  • Alaska
  • Florida
  • Nevada
  • New Hampshire (dividend and interest taxes only)
  • South Dakota
  • Tennessee (dividend and interest taxes only but will be phased out in 2021)
  • Texas
  • Washington
  • Wyoming
24 States Don’t Tax Military Retirement Pay (but they do have state personal income tax)
  • Alabama
  • Arizona
  • Arkansas
  • Connecticut
  • Hawaii
  • Illinois
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nebraska
  • New Jersey
  • New York
  • North Dakota (effective 2019)
  • Ohio
  • Pennsylvania
  • Utah (effective Jan. 1, 2021)
  • West Virginia (effective 2018)
  • Wisconsin
 
I like the states where this exclusion exists, over no income tax at all, because states have to get their funds from taxing a range of things.
I go back and forth on whether I like the exclusion. For reasons like this it creates a military/civilian divide - the civilians pay more for the states expenses that we mil fams use. Then again, I like it on a personal basis. I also wonder if first responders should have their retirement excluded.
I do like how CO does it - they exempt a portion of retirement pay with the largest amount coming after typical retirement age.
 
what is considered military retirement? I am sure it includes pension you earn after serving 20 years or so, but what about the 401k plans the military offers their people. Is that also excluded?
 
what is considered military retirement? I am sure it includes pension you earn after serving 20 years or so, but what about the 401k plans the military offers their people. Is that also excluded?
Nope, to the best of my knowledge. If it’s a Roth TSP (Thrift Savings Plan, Fed 401k), pay tax upfront like everyone else, depending on where your declared state of residence is for state income tax purposes. If not a Roth, pay taxes appropriate for wherever you are a resident for applicable state tax on your distributions.
 
Ah, that's right. There are mountains there too. And yes, the NAU campus is beautiful and DD is thriving there after a bumpy first few semesters.
Glad to hear it. DS attended Boys State there. I am about 5 hours South of her, but if she ever needs anything and I can help let me know. I wish I had stuck it out after my bumpy first few semesters decades ago (at College X).
 
Time to hit Apple-Annie's I'm thinking...
(It's an AZ thing for the rest of you)
It's a favorite of mine. Great memories of chaperoning many a field trip there. Both for the apples and the pumpkins. Great fun in the fall! I'm just 20 minutes from the interstate, if you need ideas for lunch along the way let me know!
Thanks, now I'm craving the apple bread. ;)
 
Average retired E-7 collects approx $30k. Arizona has a "marginal tax rate" of .45% for a Married couple, saving that tax payer about $135 a year. On the other hand their State Sales tax is 5.6%. Attracting this demographic is a huge net gain in tax revenue that every state should be competing for.
 
THParent forgot Maryland which also now does not tax military retirement
 
THParent forgot Maryland which also now does not tax military retirement
As a Maryland resident, I can attest the state still takes a bite out of my and DH’s retirement pay. The exclusion amount has gone up significantly in the last 20 years. I support all the Military Coalition efforts to get the legislation passed. GOV Hogan is a supporter.
 
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