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    These States Passed New Military Income Tax Cuts in 2023

    These States Passed New Military Income Tax Cuts in 2023

    With tax season only months away, service members and veterans can ring in the year knowing a handful of states cut their income taxes in 2023, though some of those changes won't take effect right away.

    The reductions include cuts benefiting younger retirees in Maryland and Virginia; new exemptions including all active-duty and reservist pay in Indiana; and up to half of the military retirement pay of new Montanans.

    Changes to states' taxes on military income signed into law by their respective governors in 2023 include:


    A new Indiana law exempts from state income tax all the military pay of active-duty service members and members of reserve units, including the state's National Guard.

    The state's previous law exempted the pay of reservists on active duty but otherwise provided only up to a $5,000 deduction.

    Indiana's changes taking effect for the 2023 tax year follow the state's total phasing out in 2022 of state income tax on military retirement pay.


    Described by the Maryland governor's office in a statement as “the largest military tax cut for younger veterans in a generation,” the state is more than doubling its exemption of military retirement pay for veterans under age 55 as well as “spouses, or anyone receiving military pensions in Maryland” under that age.

    Starting with the 2023 tax year, Maryland will exempt from state income tax the first $12,500 of the military retirement pay of…

    Continue Reading This Article At Military.com

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