Military Retirement Pay State Income Tax Exemption
100% of military retirement pay is excluded from Indiana adjusted gross income.
State BenefitIndianaTax Benefits
Verified September 30, 2026 against in.gov
At a glance
- Benefit type
- Tax Benefits — Indiana
- Who it's for
- Veterans, Active Duty, Survivors
- VA rating needed
- No rating requirement
- Estimated value
- ~$885/year on $30,000 retirement pay
- Where it applies
- Indiana
- Last verified
- September 30, 2026
What is Military Retirement Pay State Income Tax Exemption?
Military Retirement Pay State Income Tax Exemption is a Indiana tax benefits benefit for veterans, active duty, survivors. 100% of military retirement pay is excluded from Indiana adjusted gross income. The listed value is ~$885/year on $30,000 retirement pay.
Who qualifies
- Veterans
- Active Duty
- Survivors
- Available to any veteran
- Indiana residency
Who is eligible
Eligibility
Any military retiree receiving retired pay; includes all branches plus Space Force, USPHS, and NOAA officers. Active-duty pay is also 100% exempt as of tax year 2024 (the prior $5,000 cap no longer applies). Survivor Benefit Plan annuities also exempt. Must be an Indiana resident filing Indiana state taxes.
What Military Retirement Pay State Income Tax Exemption covers
Estimated savings
At Indiana's 2026 flat rate of 2.95% (declining each year), a retiree receiving $30,000/year saves roughly $885/year.
How to apply for Military Retirement Pay State Income Tax Exemption
How to apply
Claimed on Indiana state tax return (Form IT-40).
Verified information & sources
- Last verified
- September 30, 2026
- Official source
- in.gov
Compiled and fact-checked against the official source linked above. Benefit rules and dollar amounts change over time — always confirm current details at the official source before applying. A county Veterans Service Officer (VSO) is a free, accredited advocate who can review your eligibility and help you file at no cost.
How VetUnlock verifies benefitsFrequently asked questions about Military Retirement Pay State Income Tax Exemption
Who qualifies for Military Retirement Pay State Income Tax Exemption?
Military Retirement Pay State Income Tax Exemption is for Veterans, Active Duty, Survivors; available to any veteran; indiana residency. See the eligibility details on this page and confirm with the official source before applying.
How much is Military Retirement Pay State Income Tax Exemption worth?
The listed value is ~$885/year on $30,000 retirement pay. Amounts can change — confirm the current figure at the official source linked on this page.
How do I apply for Military Retirement Pay State Income Tax Exemption?
Apply through the official source linked on this page. A county Veterans Service Officer (VSO) can review your eligibility and help you file at no cost.
Where can I verify Military Retirement Pay State Income Tax Exemption?
Benefit rules and dollar amounts change, so always confirm current details at the official source linked on this page. A free, accredited county or state Veterans Service Officer (VSO) can also verify your eligibility and help you apply.
Other Indiana Tax Benefits
- Property Tax Credit -- Disabled Wartime Veteran ($350)$350/year property tax credit$350 property tax credit for wartime veterans with 10%+ disability rating (replaced the former $24,960 assessed-value deduction starting with taxes due in 2027).
- Disabled Veteran Homestead Deduction (Charitable Conveyance)Varies by disability % and home valueProperty tax deduction equal to disability percentage applied to assessed value for homes donated by tax-exempt organizations.
- Property Tax Benefit -- 100% Disabled (Full Deduction) or Age 62+ with 10%+ ($250 Credit)100% of assessed value (totally disabled) or $250/year credit (age 62+ with 10%+)Starting with taxes due in 2027: a deduction of 100% of assessed value for totally disabled veterans, or a $250 property tax credit for veterans age 62+ with a 10%+ service-connected disability (replacing the former $14,000 deduction).