Military Retirement Pay State Income Tax Exemption
Full exemption of military retirement pay from Alabama state income tax.
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Apply directly through the official Alabama agency.
About this benefit
Eligibility
Any military retiree receiving retirement pay. No age requirement, no income cap. All branches. Also covers Survivor Benefit Plan (SBP) payments and VA disability compensation.
Estimated savings
Alabama's top marginal rate is 5%, so a retiree receiving $30,000/yr saves approximately $1,500/yr.
How to apply
No application needed; exemption is automatic when filing Alabama state taxes. Legal basis: Alabama Code 40-18-20.
Verified against official source
Last checked 2026-05-05 against www.revenue.alabama.gov. Always confirm current rates and rules with the Alabama state agency before applying.
Other Alabama Tax Benefits
Property Tax Exemption (Permanently & Totally Disabled)
Full exemption from property taxes on home and up to 160 adjacent acres for permanently and totally disabled veterans.
Full property tax exemption
Property Tax Exemption (VA Specially Adapted Housing)
Complete exemption from all property taxes on a home acquired through a VA Specially Adapted Housing grant.
Full property tax exemption
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