Hawaii retired pay

Is military retirement taxed in Hawaii?

Not taxed

Exempt as an Employer-Funded Pension.

No. Hawaii does not tax qualifying distributions from an employer-funded pension, and the 2025 Form N-11 instructions name the military pension among the government retirement payments that qualify. You subtract the federally taxable amount on Form N-11, line 13, with no age, income or years-of-service test, under a public-pension rule in force since at least February 16, 1982.

The law: HRS § 235-7(a)(2) and (3); section 18-235-7-02, HAR
Current rule since: Long-standing: HRS § 235-7(a) excludes public retirement system benefits and any pension for past services, and the department's rule for public retirement systems, section 18-235-7-02, HAR, has been in effect since February 16, 1982 (renumbered December 8, 1994)
Where you claim it: Form N-11, line 13 (Pensions taxed federally but not taxed by Hawaii), 2025 return; nonresidents and part-year residents file Form N-15 instead

Read on Hawaii’s own sources October 10, 2026

What Hawaii’s rule is worth on your retired pay

Enter your annual taxable retired pay (box 2a of your DFAS or Coast Guard 1099-R). The rate starts at Hawaii’s 7.6% rate on 2025 taxable income around $75,000 (single); the top 11% starts over $325,000 for tax year 2025; change it to your own bracket if you know it.

One rate applied to the whole amount, not Hawaii’s full return: brackets, other income, deductions and credits change the real figure. Use it to compare, then check the state’s own form instructions.

How it works in Hawaii

Settle the federal figure first. Section 18-235-7-02, HAR, says a public retirement distribution that is not federally taxable is already exempt in Hawaii, so the state exclusion only has to reach the taxable part. For military retired pay that is the taxable amount on the DFAS Form 1099-R.

Write that amount on Form N-11, line 13, Pensions taxed federally but not taxed by Hawaii. It is the first subtraction line: lines 13 through 18 add up on line 19, and line 20 is Hawaii AGI. The 2025 instructions describe line 13 as the place for payments from a government retirement system and name the military pension, federal civil service, and state or county systems in the same sentence.

What decides it is who funded the pension, not the branch. Section 18-235-7-02, HAR, defines a governmental plan as one that the United States, a state or another government maintains for its employees, and the line 13 instructions require that the payment come by reason of retirement, disability, or death and not from voluntary contributions made under an elective right. Neither text carves out Guard or Reserve retired pay or confines the rule to the armed forces.

On an assumed $36,000 pension, line 13 keeps $2,736 a year out of Hawaii tax for a single filer whose taxable income is in the 7.6% bracket whether or not the pension is counted; for 2025 that bracket runs from $48,000 to $125,000. The joint schedule charges 7.6% from $96,000 to $250,000, so a married couple inside that range either way saves the same $2,736.

If an old Form N-11 left line 13 blank, amend that year on that year's form: the instructions say a 2024 return cannot be amended on a 2025 Form N-11. Fill in the amended return oval, attach Schedule AMD, and file inside the refund window of three years from filing or from the due date, or two years from payment, whichever ends last.

Survivor Benefit Plan annuities

Not addressed by name. The 2025 N-11 instructions treat a public-system distribution paid by reason of retirement, disability, or death as a qualifying pension, but section 18-235-7-02(e), HAR, withholds the exclusion from benefits attributable to voluntary contributions made under an elective right. Neither the instructions nor Tax Information Release 96-5 mentions the Survivor Benefit Plan (read October 10, 2026).

Active-duty pay in Hawaii

Taxed. Tax Information Release 90-10 says a Hawaii resident who enters the military stays subject to Hawaii tax on all income from sources inside and outside Hawaii. Reserve and Hawaii National Guard members may exclude the first $8,636 of duty pay for 2025 on Form N-11, line 15.

Missed it in an earlier year?

A refund claim generally must be filed within three years after the return is filed, within three years of the due date, or within two years from when the tax is paid, whichever is later (2025 Form N-11 instructions, line 47a). Amend on the Form N-11 for that year with the amended return oval filled in and Schedule AMD attached.

What trips Hawaii retirees up

Survivors face an open question. Section 18-235-7-02(e), HAR, denies the public-pension exclusion to benefits attributable to voluntary contributions made under an elective right, and SBP coverage is elected and paid for with premiums taken out of retired pay. Neither the 2025 instructions nor TIR 96-5 mentions the Survivor Benefit Plan, so get the department's answer before a widow or widower subtracts an annuity on line 13.
Thrift Savings Plan money is not a pension here. The instructions group the Federal Thrift Savings Plan with 401(k) and section 457 plans as deferred compensation that may be partly or fully taxable, and they send a plan holding both employer matching and employee deferrals to Schedule J. A Blended Retirement System retiree can have a fully excluded pension and a partly taxed TSP in the same year.
Orders alone do not make you a resident. The 2025 instructions say a member in Hawaii because of military orders who does not intend to make it home is not a resident even after 200 days. TIR 90-10 adds that a member who will be discharged in Hawaii and means to stay is a resident from the time domicile is established there.

Federal side: DFAS reports retired pay on Form 1099-R, and the IRS taxes it as a pension. VA disability compensation is not taxable income under federal law (IRS Publication 525). The SCRA’s tax-home rule (50 U.S.C. § 4001) protects servicemembers on orders, not retirees, so where a retiree lives decides which state taxes the pension. Compare every state on the 51-state ledger. Hawaii’s other servicemember protections are on the Hawaii SCRA page.

Frequently asked questions

Does Hawaii tax military retirement pay?

No. Hawaii does not tax qualifying distributions from an employer-funded pension, and the 2025 Form N-11 instructions list a military pension among the government retirement system payments that qualify. Enter the federally taxable amount on Form N-11, line 13, Pensions taxed federally but not taxed by Hawaii. There is no age, income or years-of-service test. The exclusion rests on HRS § 235-7(a)(2) and (3) and on section 18-235-7-02, HAR, a rule in effect since February 16, 1982 (read October 10, 2026).

Is SBP taxed in Hawaii?

Hawaii's guidance does not say. The 2025 Form N-11 instructions count a public-system distribution paid by reason of retirement, disability, or death as a qualifying pension, which points toward excluding a Survivor Benefit Plan annuity on line 13. But section 18-235-7-02(e), HAR, withholds the exclusion from benefits attributable to voluntary contributions made under an elective right, and SBP coverage is elected and paid for out of retired pay. Neither the instructions nor Tax Information Release 96-5 names SBP (read October 10, 2026), so ask the Department of Taxation before filing.

Are TSP withdrawals taxed in Hawaii?

Often at least in part. The 2025 Form N-11 instructions list the Federal Thrift Savings Plan with 401(k) and section 457 plans as deferred compensation plans, whose distributions may be partly or fully taxable, unlike the military pension subtracted on line 13. When a plan combines employer contributions such as matching with money the employee chose to defer, the instructions call it a hybrid plan and direct you to Schedule J to figure the taxable amount. Early distributions subject to the 10% federal penalty never qualify as a pension in Hawaii.

Is National Guard drill pay taxed in Hawaii?

Only the part above a cap. For 2025, Hawaii excludes the first $8,636 that each member of a reserve component or the Hawaii National Guard receives for performance of duty, entered on Form N-11, line 15. HRS § 235-7(a)(7) ties the amount to the pay for 48 drills and 15 days of annual duty at the E-5 grade after eight years of service. Duty pay above the cap is taxable for a Hawaii resident, and a Guard retiree's pension goes separately on line 13.

Sources, read October 10, 2026

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