Which States Don’t Tax Military Retirement Pay in 2025? | reAlpha Mortgage

You served your country with honor. Now it’s time to retire. But here's the catch: some states give back, others take more. If you're transitioning from military to civilian life, state taxes on retirement income can chip away at the financial freedom you earned.

Here’s the truth: your military pension might be worth thousands less annually if you pick the wrong state. Let’s sort through the confusion and spotlight states where your retirement dollars stretch furthest.

• Not all tax-free states are financially equal-property taxes and living costs vary.
• Only a select number of states fully exempt military pensions.
• VA loans can offset high living expenses, even in taxed states.
• Transitioning veterans should factor in taxes, home affordability, and VA lending access.

This guide breaks down military pension tax laws, VA loan advantages, and how to buy smart with tools like reAlpha and reAlpha Mortgage

Only 12 U.S. states offer full exemptions from military retirement pay. The rest? They either tax partially, offer exemptions with conditions, or treat your pension like any other income.

Heads up:

• 38 states still tax military retirement in some form.
• Veterans can lose $3,000 to $8,000 per year depending on their state.

That’s not just a tax burden. That’s the difference between building equity and barely breaking even.

This is especially important if you're considering buying a home. Taxes tie directly into your monthly affordability-and your long-term investment potential.

These states fully exempt military retirement pay as of 2025:

• Florida
• Texas
• Nevada
• South Dakota
• Alaska
• Wyoming
• New Hampshire
• Tennessee
• Illinois
• Mississippi
• Alabama
• Hawaii

Pro Tip: Always double-check with the state tax office for changes and fine print.

Yes, and this can offset your retirement gains. Here are some key examples:

• Texas has no income tax, but high property taxes.
• Florida balances low property taxes with no retirement tax.
• Illinois exempts military pensions, but local taxes vary wildly.

Action Step: Use reAlpha Mortgage to run a VA affordability analysis by ZIP code and see how much home you can afford with zero down.

VA loans offer:

• Zero down payment
• No private mortgage insurance (PMI)
• Competitive rates
• Flexible underwriting

Even in taxed states, a VA loan can dramatically reduce your monthly costs.

What if you could buy a home without paying agent commissions? reAlpha lets you do exactly that.

Here’s why it matters:

• Agent fees eat into your equity.
• reAlpha lets you keep more of your investment.
• Smart AI tools help you find VA loan-friendly homes.

Explore reAlpha now – because every dollar you save builds long-term wealth.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

Check if you qualify

Picture this: you move to a state that respects your service by taxing you less. You buy your dream home commission-free. Your monthly mortgage is optimized through a VA loan. One year later, your equity is growing, your costs are low, and your lifestyle is elevated.

That’s what happens when you plan with the right tools: reAlpha Mortgage and reAlpha.

Florida, Texas, Alaska, and Nevada top the list for their pension exemptions, cost of living, and VA perks.

Yes, California treats military retirement pay as regular income.

Yes, but you must meet residency requirements like living time, voter registration, and driver’s license transfer.

Loan limits, property eligibility, and funding fees may vary. Local VA loan specialists at reAlpha Mortgage can help you navigate state-specific rules, funding fees, and loan limits with ease.

It depends on your priorities: Florida is great for zero tax + VA access. Illinois works for affordability. Texas is strong in job markets.

Buying your dream home shouldn’t cost you thousands at closing. With reAlpha Mortgage, you can unlock up to 75% of your buyer agent’s commission back - real cash you can use for inspections, closing costs, or upgrades.

Here’s how the rebate stacks:

• 25% back for using a reAlpha agent

• 50% back when you finance with reAlpha Mortgage

• 75% back when you bundle reAlpha Title

You served with honor - now buy smart, save big, and start your next chapter with confidence.

See how much you can save →

• reAlpha Mortgage is a licensed mortgage broker, NMLS #1743790.
• This article is for informational purposes only and does not constitute financial or legal advice.
• VA loan terms, rates, and availability are subject to individual eligibility and underwriting approval.
• State tax policies can change. Always consult a tax professional or state tax authority for current information.

reAlpha is not a licensed mortgage broker or lender. It is a homebuying platform that helps you earn up to 75% of your buyer agent’s commission back when you purchase with reAlpha Mortgage and Title.

Find the Perfect Mortgage for Your Dream Home with reAlpha Mortgage.

Compare options, calculate payments, and get expert guidance - all in one place.

Check if you qualify