Is my military pension/retirement income taxable to Vermont? According to the Vermont website, Military Retirement is taxable and is included in gross income on the return. Start for $0 today Get your maximum refund with all the deductions and credits you deserve Get Started Login Related articles Is my retirement income taxable to Vermont? How do I deduct the military spouse’s income on the Vermont return? Is my military income taxable to Virginia? Who Can File the Vermont Homestead Declaration and Property Tax Adjustment Claim? What type of income needs to be added to my Vermont return?