(Veterans for Common Sense – July 29, 2015) – Connecticut is the latest state to exempt military retirement pay from state taxation, according to a recent Hartford Courant news story (“Military Pensions Now Fully Exempt from State Income Tax,” July 16, 2015, Andrew M. Duehren reporting).
According to a military.com tally, nine states currently have no or very limited state income taxation. And, an additional 17 states — including newest addition, Connecticut — exempt military retired pay from state taxation, along with 28 additional states, the District of Columbia, and Puerto Rico that exempt disabled retired pay from state taxation.
Many state governments have recognized the competition between the states to attract military retirees, who frequently have both shallow and diverse geographic ties and often consider state taxation and similar economic factors when determining where to ultimately settle, purchase a home, and spend their retirement income.
Military retirees who move to tax-exempt states like Connecticut and the 25 other states that do not tax military retirement pay can immediately realize a de facto pay raise.