Choosing where to live after a military career is one of the biggest financial decisions you'll make. The best military retirement states can add thousands of dollars per year to your effective income through tax policy alone.
According to the Defense Finance and Accounting Service (DFAS), retired pay is taxable at the federal level, but state treatment varies dramatically — some states tax your pension fully, while others exempt it entirely. That gap is the problem most retirees face: two retirees with identical pensions can have very different standards of living depending on their ZIP code.
This guide breaks down five top states, compares tax rules, covers healthcare and base access, and gives you practical steps to make your decision with confidence.
What Makes a State Good for Military Retirees?
The best military retirement states share three traits: favorable tax treatment of retired pay, meaningful property tax relief, and access to military installations. No single state wins on all three, so your ranking depends on your priorities.
The Tax Foundation tracks how each state treats retirement income, and its research shows a clear divide: a group of states levies no individual income tax at all, while others exempt military pensions specifically. Meanwhile, the Department of Veterans Affairs notes that many states add disabled veteran property tax exemptions that scale with your VA disability rating.
Here's how to compare states on the factors that matter most:
| Factor | Why it matters | What to check |
|---|---|---|
| Pension tax | Direct hit to monthly income | State revenue dept rules |
| Property tax | Largest ongoing housing cost | County assessor exemptions |
| Base proximity | Commissary, MWR, Space-A | Nearest installation distance |
| VA healthcare | Hospital vs. clinic access | Nearest VA medical center |
| Cost of living | Offsets tax savings | Housing and insurance costs |
How to apply this: List your top three factors, then score each candidate state from 1–5 on each before looking at any other criteria.
Florida: Zero Income Tax and a Large Veteran Community
Florida has long topped lists of the best military retirement states because it levies no state income tax on any income, including retired pay. Your pension, your Thrift Savings Plan withdrawals, and your Social Security all arrive untaxed at the state level.
The state also offers meaningful property tax breaks. Under Florida law, veterans with a VA service-connected disability rating of 10% or higher receive a discount on ad valorem taxes on their homestead, and the discount increases with the rating.
Add warm weather, no estate or inheritance tax, and one of the largest veteran populations in the country, and the case gets stronger. The tradeoffs are hurricane insurance costs and rising housing prices in coastal counties.
How to apply this: If you're considering Florida, compare homeowners insurance quotes by county — the insurance bill can offset part of the tax savings.
Texas: No Income Tax and Strong Disabled Veteran Exemptions
Texas is another no-income-tax state, and it takes veteran relief further than most. The Texas Comptroller's office administers a 100% disabled veteran property tax exemption on a homestead, with partial exemptions available at lower ratings.
Texas also has a deep military footprint — Fort Cavazos (formerly Fort Hood), Joint Base San Antonio, and Naval Air Station Corpus Christi among them — so Space-A travel, commissaries, and MWR facilities remain accessible in many regions. San Antonio in particular has one of the largest military retiree communities in the nation.
The main drawback is property tax. Texas has some of the highest effective property tax rates in the country, so the disabled veteran exemption carries real weight there.
How to apply this: Request a property tax exemption application from your county appraisal district before you close on a home — eligibility dates matter.
Texas pairs zero income tax with a full homestead exemption for 100% disabled veterans, making it a frequent pick among the best military retirement states. For retirees weighing the best military retirement states, the Texas Comptroller's administration of that exemption keeps the process straightforward.
Virginia's proximity to the Pentagon and Norfolk keeps it on many shortlists of best military retirement states, despite its history of taxing retired pay. Retirees comparing the best military retirement states should note that Virginia now exempts a portion of military retirement income.
Virginia and North Carolina: Big Military Footprints, Changing Tax Rules
Virginia borders the Pentagon and hosts Norfolk, the world's largest naval base, making it a natural landing spot. For years its taxation of retired pay held retirees back, but Virginia now exempts the first $40,000 of military retirement income from state tax, with the exemption phasing up for taxpayers 65 and older.
North Carolina, home to Fort Liberty (formerly Fort Bragg) and Camp Lejeune, passed legislation making military retired pay fully exempt from state income tax starting with the 2022 tax year — one of the most significant veteran tax changes in recent years.
Both states offer four-season climates, proximity to major VA medical centers, and dense retiree networks. Housing costs in Northern Virginia, however, are among the highest in the country.
How to apply this: If you have a taxable pension in Virginia, model your actual bill with and without the exemption at your age bracket.
Tennessee's limited wage taxation and untaxed retirement income place it among the best military retirement states for retirees seeking alternatives. Anyone ranking the best military retirement states should weigh Tennessee's lack of a state property tax alongside its income tax structure.
Healthcare access can outweigh tax savings when evaluating the best military retirement states for your later years. Among the best military retirement states, the ones that work best keep a VA medical center and TRICARE options within reasonable reach.
Tennessee and Other No-Income-Tax Alternatives
Tennessee completed its phase-out of the Hall income tax, and it now taxes wages but not investment or retirement income — and even wage taxation is limited. Combine that with no state property tax (county property taxes are modest) and low housing costs, and cities like Clarksville, near Fort Campbell, have become retiree magnets.
Other no-income-tax states worth considering include Nevada, Washington, South Dakota, Wyoming, and Alaska. Each carries tradeoffs: Nevada has desert heat and distance from installations outside Reno area; Alaska offers a Permanent Fund dividend and no income or state sales tax, but a high cost of living and remoteness.
The lesson is that "no income tax" alone isn't the whole story — sales tax, property tax, and insurance fill the gap differently in each state.
How to apply this: Use the Tax Foundation's state-by-state rankings to shortlist states, then price out a realistic annual budget in your top two.
VA disability compensation stays tax-free in every state, so this factor won't change your ranking of the best military retirement states. Property tax breaks for disabled veterans, however, do vary and deserve a close look when comparing the best military retirement states.
Because residency follows your actions rather than your retirement paperwork, your tax picture shifts when you move between the best military retirement states. Choosing among the best military retirement states means updating vehicle registration and voter status so your new residency is clear.
Healthcare and Base Access: The Factor Retirees Forget
Taxes dominate the conversation, but healthcare access often matters more in your sixties and seventies. Before you commit, verify the distance to the nearest VA medical center and whether TRICARE network providers are plentiful in your target area — TRICARE Prime availability varies significantly by region, while TRICARE Select works nationwide.
Proximity to an installation also preserves benefits many retirees underestimate:
- Commissary and exchange savings
- Space-Available flights for travel
- MWR facilities, golf courses, and campgrounds
- The military treatment facility pharmacy
MOAA (the Military Officers Association of America) regularly advises retirees to weigh installation access as heavily as tax savings, because those benefits compound over a 30-year retirement.
How to apply this: Search the VA facility locator for your candidate towns and note drive times before you fall in love with a house.
States offering full property tax exemptions for totally disabled veterans often top the list of best military retirement states, with Texas, Florida, and Virginia standing out.
The best military retirement states balance tax perks with real access to VA hospitals and TRICARE providers.
Frequently Asked Questions About best military retirement states
How do I know if my military pension is taxed in a specific state?
Check the state's department of revenue website for its current retirement income rules, since they change with legislation. A common exception: some states exempt military pensions but still tax other retirement income like 401(k) withdrawals. When comparing the best military retirement states, verify the rule for the year you'll actually establish residency.
Does my state of residence affect my VA disability compensation?
No. VA disability compensation is exempt from both federal and state income tax in all 50 states. The exception to watch is property tax — many states offer exemptions or reductions tied to your disability rating, so a high rating changes which state saves you the most.
When comparing the best military retirement states, remember that VA disability compensation stays untaxed everywhere.
Property tax exemptions, not income tax, often separate the best military retirement states for disabled veterans.
What happens if I move to a new state after retiring?
Residency follows your actions, not your retirement paperwork. You generally become a resident by living there, registering vehicles, and voting, so your tax situation changes with you. One scenario to plan around: keeping your legal domicile in a no-tax state while living elsewhere won't avoid taxes in the state where you actually reside.
Residency rules mean the best military retirement states only help you once you actually establish domicile there.
Many retirees relocate after a few years, so revisit which best military retirement states fit your new circumstances.
Which state is best for retirees with a 100% VA disability rating?
States with full property tax exemptions for totally disabled veterans often deliver the biggest benefit, since the pension itself is untaxed everywhere. Texas, Florida, and Virginia all offer strong versions of this exemption. Compare homestead exemption rules by county, because some localities add extra relief on top of the state law.
For a 100% rating, the best military retirement states are those with full property tax exemptions like Texas and Florida.
Should I choose a state based on taxes or family proximity?
Run the numbers both ways before deciding. A state with high taxes but free childcare from nearby family can beat a no-tax state where you pay $1,500 a month for daycare. The best military retirement states for your neighbor may be the worst for you — taxes are one input, not the whole decision.
Conclusion: Pick the State That Fits Your Numbers
Choosing among the best military retirement states comes down to your specific pension, disability rating, and lifestyle priorities. The key takeaways:
- No-income-tax states like Florida, Texas, Tennessee, and Nevada eliminate state tax on retired pay entirely
- Property tax exemptions for disabled veterans can outweigh income tax savings in high-tax states
- Healthcare and base access deserve equal weight to tax policy in your decision
- Residency rules change — verify current law for the year you move
Run your own numbers using the DFAS Retired Pay overview and your state's revenue department publications. Then visit your top two candidates in different seasons before buying. The right state is the one where your budget, healthcare, and family all align — start that comparison today.
