Where you retire changes your military pension's tax bill
Three states, three very different answers for the same pension.

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The short answer, and why the state line matters

Start with what does not change. Military retired pay is taxable at the federal level no matter where you live, because it is ordinary retirement income earned for years of service (VET-MIL-01). Your VA disability compensation is the opposite: it is excluded from income at every rating, so it never shows up as taxable at the federal or state level (VET-VA-02). Those two facts follow you across every state line in the country.

What changes when you move is the state layer sitting on top of the federal one. Most states start their income tax from your federal income and then add back or subtract specific items. So the real question for a military retiree choosing between New York, Connecticut, and Florida is not whether the pension is income. It is whether that particular state chooses to tax it. On military retired pay specifically, all three answer no. The interesting differences are in how they treat the rest of your retirement income, and how durable each break is.

New York: military and government pensions are fully exempt

New York fully exempts US military retired pay from state, New York City, and Yonkers income tax, with no dollar cap (VET-NY-01). The same full exemption covers federal and New York government pensions, including a FERS annuity for veterans who went on to federal civilian service. If your retirement income is a military pension, a federal pension, or both, New York does not tax it.

There is a separate and often-confused break: New York's $20,000 pension and annuity exclusion for people age 59 and a half or older. That $20,000 exclusion applies to private pensions and annuities, not to military or government pensions (VET-NY-01). Where it can matter for a veteran is on money like a TSP withdrawal beyond the exclusion amount, which New York can tax as private retirement income. The military pension itself is already fully out, so the exclusion is aimed at your other accounts.

The practical read: in New York, the core military and federal pension is untaxed at the state level, and the planning conversation moves to how your TSP and IRA withdrawals are sequenced. That sequencing question is a tax matter, so it belongs with your tax professional.

Connecticut: military pay is 100 percent out, but the broader pension break phases by income

Connecticut exempts 100 percent of military retired pay with no age or income condition, and it also exempts Social Security for most retirees (VET-CT-01). On the military pension alone, Connecticut and New York land in the same place: nothing taxed by the state.

The difference appears on Connecticut's broader retirement income. Connecticut offers a pension-and-annuity income deduction, and beginning tax year 2026 a matching 100 percent IRA-distribution deduction, but these phase out by income. They are 100 percent below federal adjusted gross income of $75,000 for a single filer or $100,000 for a married couple filing jointly, then step down to zero by $100,000 single and $150,000 joint (VET-CT-01). So a Connecticut retiree whose income climbs, say through large IRA or TSP withdrawals in a given year, can watch that broader deduction shrink even though the military pension stays fully exempt.

That AGI sensitivity is exactly the kind of thing worth modeling before you pull a big withdrawal or run a Roth conversion, because the withdrawal that funds this year can quietly raise the tax on next year's other income. The intermediate phase-out math is detailed and fact-specific, so run the actual numbers with a tax professional rather than eyeballing the brackets.

Florida: no state income tax, and what that does and does not solve

Florida has no state personal income tax, so there is no state return, no pension exemption to qualify for, and no phase-out to track. Your military pension, your TSP withdrawals, your IRA distributions, and your Social Security all arrive with no state income tax applied. For a retiree with substantial taxable withdrawals beyond the pension, that is a structurally different outcome than a state that only shelters the pension itself.

Two honest caveats keep this from being a simple win. First, no state income tax does not mean no cost of living difference, and property, insurance, and other costs vary widely by location. Second, your federal tax bill does not change when you move to Florida. The federal treatment of your military pay, your withdrawals, and your capital gains travels with you. A move affects the state layer only.

So Florida removes the state variable entirely, while New York and Connecticut remove it for the military pension and leave a state conversation open on your other income. Which of those matters most depends on how much of your retirement income sits outside the pension, and that is a planning question, not a one-size answer.

What a state comparison decides, and what it does not

A state comparison tells you how each state treats each type of income. It does not, by itself, tell you where you should retire or when to draw from which account. Those answers depend on your full picture: the mix of military pay, TSP, IRA, and taxable accounts, your age and required distribution timeline, your other income, and your goals for the money. The state rule is one input.

Sirmium Capital is a New York state-registered investment adviser, and this article is education, not tax or legal advice. Eslyn Hernandez, who writes here, is not a registered adviser; investment and planning questions route to the firm's Chief Investment Officer. Anything that turns on your specific tax outcome, including how a withdrawal interacts with Connecticut's income phase-out or New York's private-pension exclusion, belongs with your own tax professional.

If you want to see how the pieces fit for your situation, the free Veterans retirement calculator lets you model your military pension, TSP, and the state treatment side by side, and a free 15-minute call is a good place to bring your numbers and ask what a move would actually change.