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If you are a military retiree with a VA disability rating, two tax levers move the most money: whether the state taxes your military pension, and whether it gives a full property-tax exemption at a 100% rating. These states win on both, from primary-source-verified 2026 data.
No tax on military retirement pay and a full property-tax exemption for a veteran rated 100% permanent & total (or paid at the 100% rate). The strongest combination for a disabled retiree. Open any state for the exact rules.
These states tax no income, so your military pension, civilian earnings, and Social Security are all untaxed at the state level. (Watch property and sales taxes, which can run higher.)
What this ranks: the two highest-dollar tax levers only, from the verified 2026 dataset — state income tax on military retirement, and the disabled-veteran property-tax exemption. A "double win" means no retirement tax and a full 100% exemption; partial and income-tested breaks are not counted here.
Not the whole story: the best state for you also depends on VA healthcare proximity, cost of living, the job market, and family tuition benefits. Weigh those with the full state benefits comparison and the scored best states for disabled veterans ranking. Confirm any exemption with the state before relying on it.
On the two biggest tax levers, 19 states are "double wins": they do not tax military retirement pay and they fully exempt the primary residence of a veteran rated 100% permanent & total. Those states are Alabama, Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, Oklahoma, Pennsylvania, South Carolina, Texas, West Virginia, Wisconsin. Nine of the fifty-plus have no state income tax at all (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming), so nothing you earn is taxed at the state level.
19 states combine both: Alabama, Arizona, Arkansas, Florida, Hawaii, Illinois, Indiana, Iowa, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, Oklahoma, Pennsylvania, South Carolina, Texas, West Virginia, Wisconsin. Each fully exempts military retirement pay from state income tax (or has no income tax) and grants a full property-tax exemption to veterans rated 100% permanent & total (or paid at the 100% rate for individual unemployability). Eligibility details vary — open a state to see the exact rule and source.
Not quite. This page ranks states on the two highest-dollar tax levers only. The best overall state for you also depends on VA healthcare access, cost of living, the job market for your next career, and tuition benefits for your family. Use it alongside the full state comparison and the state value calculator to weigh your whole situation.