How each state treats military retired pay and Survivor Benefit Plan annuities in its income tax, and what it offers disabled veterans on property tax and vehicle registration — as each state’s own revenue department, legislature, veterans agency or motor-vehicle agency states it.
Example: three states from different regions — choose any three.
The four rules side by side (example states)
Topic
California
Texas
Virginia
Retired pay
Partly exempttax year 2025
No income tax
Partly exempttax year 2025
SBP
Partly exempt
No income tax
Partly exempt
Property tax break
Yes
Yes
Yes
Vehicle fee break
Yes
Yes
Yes
Military retired pay: what each rule saysMilitary retired pay
California
Partly exempt
tax year 2025
For taxable years beginning on or after January 1, 2025, and before January 1, 2030, California excludes up to $20,000 of retirement pay from the federal government for service in the uniformed services (R&TC §§ 17132.9 and 17132.10). The qualified taxpayer’s federal AGI must not exceed $125,000, or $250,000 for a surviving spouse or spouses filing a joint return. The Franchise Tax Board adds that the exclusion is capped at $20,000 for a surviving spouse, spouses filing a joint return, and any other individual who did not exceed the AGI limits.
Texas has no state income tax, so military retired pay is not taxed by the state. The Comptroller of Public Accounts states that Texas has no state income tax.
Virginia lets each recipient subtract up to $40,000 of military benefits, including military retirement income, for tax years beginning on and after January 1, 2025, at any age (Va. Code § 58.1-322.02, subdivision 18 c). Each spouse may subtract up to the maximum on benefits that spouse receives. Military retirement income of a Congressional Medal of Honor recipient is fully subtracted.
The same exclusion covers annuity payments under a U.S. Department of Defense Survivor Benefit Plan, not to exceed $20,000 for each type of payment (retirement pay and SBP annuity), for taxable years 2025 through 2029 and subject to the same federal AGI limits of $125,000, or $250,000 for a surviving spouse or spouses filing a joint return.
Benefits paid to the surviving spouse of a veteran under the Survivor Benefit Plan count as military benefits, so they share the same subtraction of up to $40,000 for tax years beginning on and after January 1, 2025 (Va. Code § 58.1-322.02, subdivision 18 d).
Property tax (disabled veterans): what each rule saysProperty tax (disabled veterans)
California
Exemption or credit
California’s Disabled Veterans’ Exemption (R&TC § 205.5) reduces the property tax on the principal place of residence of a veteran who, because of a service-connected injury or disease, is rated 100% disabled or is compensated at the 100% rate due to unemployability; blindness in both eyes or loss of use of two or more limbs also qualifies. For the 2026 lien date the basic exemption is $180,671, and the low-income exemption is $271,009 for households with income not over $81,131. There is no partial exemption for ratings below 100%.
Texas gives a total property tax exemption on the residence homestead of a disabled veteran awarded 100 percent disability compensation for a service-connected disability with a rating of 100 percent disabled or of individual unemployability (Tex. Tax Code § 11.131). Veterans with lower ratings get a partial exemption on any one property under Tex. Tax Code § 11.22, set by the disability rating.
Virginia exempts from real property tax the principal residence of a veteran rated by the U.S. Department of Veterans Affairs as having a 100 percent service-connected, permanent, and total disability (Va. Code § 58.1-3219.5, under Va. Const. art. X, § 6-A). The exemption covers the dwelling and up to one acre of land, or more acres if the locality exempts more for its elderly and disabled program.
Vehicle registration (disabled veterans): what each rule saysVehicle registration (disabled veterans)
California
Fee waiver or discount
A qualified disabled veteran with Disabled Veteran (DV) License Plates is exempt from vehicle registration and license fees on one passenger vehicle, motorcycle, or commercial vehicle of 8,000 pounds unladen or less not used for hire (the DMV page cites Cal. Vehicle Code § 5007). Qualifying veterans were permanently disabled by an injury or disease incurred on active service and have a 100% rating for a disorder that substantially impairs mobility, cannot move without an assistive device, have lost the use of one or more limbs, or are permanently blind.
A veteran with a service-connected disability rating of 50 percent or more, or 40 percent or more due to amputation of a lower extremity, may register one vehicle with Disabled Veteran (DV) specialty plates for a $3 annual specialty plate fee and $0 annual registration and local fees. Additional vehicles may display DV plates but pay registration and local fees.
No annual registration fee and no special plate fee is charged for one personal motor vehicle of a disabled veteran with a service-connected disability who has lost, or lost the use of, a leg, arm, or hand, is blind, or is permanently and totally disabled as the VA certifies, with Disabled Veteran (DV) or standard passenger plates (Va. Code §§ 46.2-739, 46.2-100). Other veterans with any VA-certified service-connected disability may buy DV plates for a $10 special plate fee plus registration fees.
How each state taxes military retired pay and SBP annuities, read October 28, 2026. Each state’s page has the details and the official sources, and also its property tax and vehicle registration relief for disabled veterans: all 51 have a property tax exemption or credit for some disabled veterans and 49 a vehicle fee waiver or discount (no waiver found for Wisconsin; New Jersey’s pages don’t clearly say). Who qualifies — the rating, residence and other conditions — differs by state.
State income tax on military retired pay and SBP annuities, all 50 states and DC
“Check with state”: the state’s own pages read that day don’t clearly answer; its page says what they do say.
How this was read
Every cell comes from the state’s own pages — revenue department instructions and FAQs, the statute on the legislature’s site, the state veterans agency or the motor-vehicle agency — read on October 28, 2026, the normal way (no archived copies or workarounds).
“Check with the state” means the official pages read that day don’t clearly answer the question; the state’s page says what they do say.
Tax rules change each tax year, mostly in January; the dates of the documents read are on each state’s page. For the state tax on retired pay in a retirement estimate, see the military retirement calculator.