Military retirement benefits are fully exempt from New York State income tax.
If you receive military retirement pay as a retired member of the U.S. Armed Forces, or as a beneficiary receiving military retirement benefits, the income is not taxable by:
- New York State
- New York City
- Yonkers
Because the income is exempt, it should not be included as taxable income on your New York return.
New York also allows a subtraction for pensions received from the federal government, including military retirement benefits, when those amounts are included in federal adjusted gross income.
How Do I Exclude Military Retirement Income in the Program?
If your military retirement income is included on your federal return, enter the exclusion on your New York return by following these steps:
- State Section
- Edit New York Return
- Subtractions From Income
- Certain Pension Income Is Excluded from New York Taxable Income
- Enter the Taxable Pensions Received from New York State, Local, and Federal Governments
The program will use this information to calculate the appropriate New York subtraction and remove the military retirement income from New York taxable income.
Who Qualifies?
You may qualify for this subtraction if you received:
- Military retirement pay based on prior military service.
- Survivor or beneficiary payments from a military retirement plan.
- Other qualifying federal government pension income that is taxable on the federal return.
Important Note
This exemption applies to military retirement income and should not be confused with active-duty military pay, which follows separate New York residency and military income tax rules. If you are currently serving in the military and receiving active-duty pay, different rules may determine whether that income is taxable by New York.