Massachusetts retired pay

Is military retirement taxed in Massachusetts?

Not taxed

Exempt Since 1997, SBP Too.

No. M.G.L. c. 62, § 2(a)(2)(E) removes retirement pay of a retired member of the uniformed services, and survivorship benefits under 10 U.S.C. §§ 1431 to 1460, from Massachusetts gross income, with no age or income test. The rule has applied since tax year 1997 under St. 1997, c. 139, and it reaches the NOAA and Public Health Service commissioned corps.

The law: M.G.L. c. 62, § 2(a)(2)(E)
Current rule since: tax year 1997 (St. 1997, c. 139, approved November 6, 1997, effective for tax years beginning on or after January 1, 1997)
Where you claim it: Form 1, line 4 (Taxable Pensions and Annuities): if your pension is exempt, enter 0 in line 4 and note the source on the dotted line to the left (2025 Form 1 instructions)

Read on Massachusetts’s own sources October 10, 2026

What Massachusetts’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 Massachusetts’s flat 5% rate on taxable income around $75,000 for 2025; the extra 4% surtax starts over $1,083,150 for tax year 2025; change it to your own bracket if you know it.

One rate applied to the whole amount, not Massachusetts’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 Massachusetts

Report nothing for the pension. The 2025 Form 1 instructions say that if your pension is exempt, you enter 0 in line 4 and note the source on the dotted line to its left. They list noncontributory pension income or survivorship benefits from the Army, Navy, Marine Corps, Air Force, Coast Guard, and the commissioned corps of the Public Health Service and NOAA as exempt, so the DFAS 1099-R never enters Massachusetts gross income. On an assumed $36,000 pension, that keeps $1,800 a year away from the 5% tax.

Massachusetts arrived late. Its exclusion long covered only contributory government pensions, and DOR's TIR 92-3 (April 28, 1992) concluded that military retirement benefits stayed taxable because the military plan is noncontributory. St. 1997, c. 139, approved November 6, 1997, added the uniformed services language to § 2(a)(2)(E) for tax years beginning on or after January 1, 1997. TIR 92-3 is still posted on mass.gov and describes the law before that change.

The 2025 instructions require a resident return only when Massachusetts gross income was more than $8,000, and DOR says U.S. military pensions are excluded from Massachusetts gross income. Read together, the pension alone does not trigger a return. Social Security is not reported on Form 1 at all, but wages from a second career, IRA withdrawals and Thrift Savings Plan distributions count toward the $8,000.

A second federal career adds no Massachusetts tax on the civilian annuity either. DOR's government pension page says distributions from a federal employee contributory plan are excluded from Massachusetts gross income, and the same page treats those pensions paid to surviving spouses as exempt. Thrift Savings Plan withdrawals are the exception: DOR says they are fully taxable in the year paid.

If an earlier return reported the pension as taxable, file a new Form 1 for that year with the Amended return oval filled in. The 2025 instructions allow three years from the date the original return was filed, so a 2023 return filed in April 2024 can be corrected until April 2027.

Survivor Benefit Plan annuities

Exempt. The statute excludes income received from the United States government as survivorship benefits under 10 U.S.C. sections 1431 to 1460, the range that holds the Survivor Benefit Plan (including the reserve-component annuity) and the older Retired Serviceman's Family Protection Plan. The 2025 Form 1 instructions list survivorship benefits from the uniformed services as exempt (read October 10, 2026).

Active-duty pay in Massachusetts

Taxed for residents. DOR's military page says military service compensation is included in Massachusetts gross income for residents but not for nonresidents, and combat zone compensation is excluded for both; a member who enlisted as a Massachusetts resident remains one until establishing legal residence in another state.

Missed it in an earlier year?

Generally, an amended return must be filed within three years of the date the original return was filed (2025 Form 1 instructions). Complete a new Form 1 for that year with the Amended return oval filled in.

What trips Massachusetts retirees up

The statute borrows the uniformed services definition in 10 U.S.C. § 1072, which adds the NOAA and Public Health Service commissioned corps to the armed forces, so retirees of those corps exclude their retired pay too. The 2025 Form 1 instructions do not list the Space Force by name, but § 1072 counts it through the armed forces, and the Governor's FY2027 tax expenditure budget names the Space Force among the covered services.
Retirees who teach JROTC keep that paycheck in income. DOR's government pension page says a retired officer or NCO employed as a JROTC instructor or administrator is not considered to be on active duty or inactive duty training, so that pay cannot be excluded even though the retired pay beside it is.
DOR has not addressed a former spouse's court-ordered share. The statute speaks of retirement pay for a retired member and of survivorship benefits, and neither DOR page read on October 10, 2026 says whether a Massachusetts-resident former spouse may exclude a court-ordered share of the retired pay.
DFAS lists Massachusetts among the states it can withhold for, but nothing in the pension is taxable here. If DFAS is holding back Massachusetts tax from your retired pay, stop it in myPay or on DD Form 2866; the money only comes back as a refund after you file.

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. Massachusetts’s other servicemember protections are on the Massachusetts SCRA page.

Frequently asked questions

Does Massachusetts tax military retirement pay?

No. M.G.L. c. 62, § 2(a)(2)(E) excludes income received from the United States government as retirement pay for a retired member of the uniformed services, regardless of whether the retiree contributed to the plan. The 2025 Form 1 instructions tell you to enter 0 in line 4 for an exempt pension and note the source beside it. The exclusion has applied since tax year 1997 under St. 1997, c. 139, and has no age, income or dollar limit. DOR's military page, read October 10, 2026, says the same for residents and nonresidents.

Is SBP taxed in Massachusetts?

No. The statute excludes income received from the United States government as survivorship benefits under 10 U.S.C. sections 1431 to 1460, which is where the Survivor Benefit Plan, its reserve-component annuity, and the older Retired Serviceman's Family Protection Plan sit in federal law. The 2025 Form 1 instructions list survivorship benefits from the uniformed services among exempt pensions, so a surviving spouse enters 0 for the annuity in line 4. There is no age test for survivors in Massachusetts (read October 10, 2026).

Do NOAA and Public Health Service retirees pay Massachusetts tax on retired pay?

No. Massachusetts defines the covered service by reference to 10 U.S.C. § 1072, whose definition of the uniformed services adds the commissioned corps of NOAA and the Public Health Service to the armed forces. The 2025 Form 1 instructions name both corps in the list of exempt noncontributory pensions, and DOR's military page says U.S. military pensions include those derived from the two corps. Their survivorship benefits are covered on the same terms, so the retiree or survivor enters 0 in Form 1, line 4 (read October 10, 2026).

Do I have to file a Massachusetts return if my only income is military retirement pay?

Usually not. The 2025 Form 1 instructions require a resident return only when Massachusetts gross income was more than $8,000, and the Department of Revenue says U.S. military pensions are excluded from Massachusetts gross income. Social Security is not taxed and is not reported on Form 1. Wages, IRA withdrawals and Thrift Savings Plan distributions do count toward the $8,000, so a retiree with a part-time job or IRA income may still need to file. Filing is also how you recover Massachusetts tax withheld by mistake.

Sources, read October 10, 2026

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Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.