Browse 2026 Military Pay planning pages for all 50 states.
Federal pay is the same everywhere — base pay, BAH, BAS, and special pays come out of DFAS regardless of duty station. What changes by state is how much of that pay the state taxes. A California-domiciled E-5 keeps less of the same DFAS deposit than a Texas-domiciled E-5 at the same rank and years of service. Over a 20-year career the gap can exceed $50,000.
Two things drive the state-by-state difference: (1) whether the state taxes active-duty pay at all, and (2) how the state treats military retirement pay later. The states below get both right.
Nine states levy no broad-based personal income tax. For active-duty service members and military retirees, this is the cleanest tax outcome — there is no state income tax filing required at all (caveats for New Hampshire and Washington noted below).
| State | Status | Effect on Military Pay |
|---|---|---|
| Alaska | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Florida | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Nevada | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| New Hampshire | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| South Dakota | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Tennessee | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Texas | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Washington | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
| Wyoming | No state income tax | Active-duty pay, retirement, drill pay, and VA disability all untaxed by the state. |
If you plan to retire from the military and stay in the same state, this matters more than active-duty tax treatment. Most states fully exempt military retirement pay; a smaller group exempts it partially; one state taxes it in full.
| Group | Treatment | States |
|---|---|---|
| Full exemption | No tax on retirement pay | The 9 no-income-tax states above, plus most states that explicitly exempt military pensions (e.g. Alabama, Arkansas, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, West Virginia, Wisconsin, Indiana, Nebraska, Utah, Arizona, Kansas). |
| Partial exemption | Partial / age- or amount-capped | Approximately 11 states cap the exemption at a dollar amount, restrict it to retirees over a certain age, or phase it out at higher incomes. Examples include Colorado, Delaware, Georgia, Idaho, Kentucky, Maryland, Montana, New Mexico, Oregon, South Carolina, Vermont. Verify your state's current rules before relocating. |
| Full taxation | Fully taxed as income | California is the only state that fully taxes military retirement pay as ordinary income. |
Federal pay components are calculated by DFAS using DoD-published tables and do not change by state:
If you change your state of legal residence (SLR), that changes which state's income tax applies to your wages — even if your duty station is somewhere else. Active-duty service members can establish residency in a tax-friendly state and keep it across PCS moves under the Servicemembers Civil Relief Act (SCRA). Verify with a JAG legal assistance office before changing SLR.
BAH is set by the duty ZIP code, not the state. Two ZIPs in the same state can have very different BAH rates. Use the BAH calculator to compare specific duty stations.
Under SCRA, your active-duty wages are taxed by your state of legal residence, not your duty station. If your SLR is Texas and you're stationed in California, California cannot tax your military wages. (California can tax non-military income earned in California, like a spouse's job — that's a separate analysis.)
Pick a state from the "full exemption" group above to keep your retirement pay untaxed at the state level. Cost of living matters too — see Kiplinger's no-income-tax cost-of-living rankings before deciding.
No. BAH is tax-free at both federal and state level in every state. This is a major reason military take-home pay outperforms equivalent civilian salary.