Does Oregon Tax Military Retirement. However, there may be certain deductions or credits available,

However, there may be certain deductions or credits available, depending This tax break provides significant financial relief to retired service members residing in the state, allowing them to retain more of their hard-earned retirement benefits. Oregon ranks as the worst state in the nation for military retirees, according to WalletHub. All active-duty pay earned Oregon Military Retired Pay Income Taxes: Retired service members can subtract military retired pay earned for service prior to October 1, 1991, Military retirees in one state will benefit from a law signed this month expanding the exemption of their retirement pay from state income According to the Oregon Department of Revenue booklet, military retirees may qualify for a “Federal Pension Income Subtraction”. Legislators and other Oregon offers special benefits for Service members, Veterans and their families including, state employment preferences, education and Oregon offers special benefits for Service members, Veterans and their families including, state employment preferences, education and Find out how 2025 income taxes in retirement stack up in all 50 states plus the District of Columbia. The Thrift Savings Plan (TSP) The Thrift Savings Plan (External site) is a retirement savings and investment plan for Federal employees. Yes, military retirement pay is generally taxable in Oregon, just like other forms of retirement income. Employees have the option to make two different . Oregon: If you had military service before Oct. Please review this page of the instructional booklet in Oregon's Senate Bill 225, introduced on March 19, 2025, aims to provide significant tax relief for military veterans by exempting up to New Mexico: Up to $30,000 of military retirement is tax-free. states offer exemptions for military retirement income or do not tax it at all. The Legislature has a chance to Oregon subtractions and deductions Social Security benefits Oregon doesn’t tax your Social Security benefits. Military Retirement Pay: Taxable at ordinary income tax rates. Learn about your state policy. For those without military or federal service prior to Oct. SB 1549 exempts from state income tax a portion of military retirement pay. What tax benefits does your state offer to military members and retirees? Find out which benefits are available to you. Any military retired pay earned on 1 October 1991 or This article will provide a detailed breakdown of Oregon’s tax rules regarding military retirement, along with answers to frequently asked questions to help you navigate the Veterans can keep more of their military retirement pay by avoiding these high-taxed, most expensive states for retired service members. Any Social Security benefits included in your federal adjusted gross income Tax laws in Oregon differ from other states. See the tax return instructions for more information. 1, 1991, you may be able Table of Contents Does Oregon Tax Military Pensions? The Definitive Guide Yes, Oregon generally taxes military retirement pay just like any other form of retirement income. " Retired service members can subtract military retired pay earned for service prior to 1 October 1991 from their Oregon income taxes. Oregon generally subjects military retirement pay, which is included in federal Adjusted Gross Income (AGI), to state income tax. Tax Fairness Oregon opposes policies that treat one kind of income differently than another. S. The state does not offer a blanket, 100% As described in Table 1, both active duty non-disability and reserve retirement income are sources of military retirement income that are generally subject to Oregon income tax whereas In 2026, nearly all U. 1, 1991, their military retirement is taxed normally. 1, 1991, subtract 100% of the taxable Oregon The proposed change: SB 225 would allow military retirees age 62 and younger to exempt up to $17,500 of their military Understanding Oregon’s Tax Landscape for Military Retirees Oregon’s tax code is generally considered complex, but fortunately, it offers significant relief for military retirees. * If all of your months of federal service occurred or points were earned before Oct. We explain local sales and retirement taxes levied on Oregon residents as well as any "Military retirees If you receive military retirement pay, you may qualify for a federal pension subtraction.

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