I agree with this policy—but I’m curious: What has led states who exempt military retiree pay to do so? Large population of veterans voting? Are they competing to bring in retirees who will spend their money in that state? Something else?
It’s not necessarily the votes. It’s the spendable income. Military retirees are not teetering at grave’s edge at retirement age from, say, mid-forties on. They can go right into another career, with degreed retirees and tech retirees earning lucrative salaries. They want to keep these military retirees in state as they start another career with a taxable civilian salary. And, when they stop working in Maryland, for example, which is inching toward no income tax on retiree pay, many just move over the state line to the Gettysburg area, not too far from military bases, close enough to major airports, reasonable runs to BWI or IAD, close to big city stuff in DC or Baltimore. PA does not tax either military or federal retired income. My DBIL is a retired Navy O-6/retired defense senior analyst with a well-known firm, and my DSIL is a retired GS-12. They sold their home in NoVa, which they had hung onto through multiple PCS moves and rental tenants, for a tidy-plus sum, and are enjoying life in that Gettysburg area, having paid cash for a right-sized home there on a golf course. They skipped right over Maryland, though it is closer to their married daughters’ families in NoVa.
Additionally, military retirees have excellent retiree medical benefits and dental benefits through both DoD and the VA, which pay, and are not likely to become a drain on state and county resources.
NC was one of the few states that did this, a few decades ago, and many military retirees went there. More and more have eliminated it over the years. MOAA (Military Officers Assn of America) has been a big voice in the Military Coalition lobbying for this.
HI has also not taxed military retiree income for many years. With the multitude of military bases, retirees can mitigate the high cost of living there by buying gas, groceries and household items, clothings, etc., at NEX/BX and Commissary, tax-free and usually lower coat. Ditto military rec facilities, including some great golf courses.
Military retiree healthcare is taken care of by retiree TRICARE for a few hundred dollars per year (not month!), pharmacy at military facilities is free, and at age 65, Medicare and TRICARE for Life take care of everything with zero co-pays. That’s just a broad brush of retiree healthcare.
www.military.com
Except I get this notice at that link because I'm not a member - I think I'll sign up.
