New York retired pay
Is military retirement taxed in New York?
Not taxed
Exempt Statewide, NYC and Yonkers.
No. New York subtracts any pension you receive as an officer, employee, or beneficiary of an officer or employee of the United States, the military included, on Form IT-201, line 26, with no dollar cap or age test. The Department of Taxation and Finance says military pensions are totally exempt from New York State, New York City, and Yonkers income taxes.
- The law
- N.Y. Tax Law § 612(c)(3)(ii)
- Current rule since
- Not dated in the department's guidance; Tax Law § 612(c)(3)(ii) and line 26 of the 2025 IT-201 cover every year still open for refund
- Where you claim it
- Form IT-201, line 26 (Pensions of New York State and local governments and the federal government) for tax year 2025
Read on New York’s own sources October 9, 2026
What New York’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 New York’s 5.4% rate on taxable income around $75,000 for 2026; the top 10.9% starts over $25 million for tax year 2026; change it to your own bracket if you know it.
One rate applied to the whole amount, not New York’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 New York
Find the taxable amount of your retired pay in your federal adjusted gross income, then enter it on line 26 of the 2025 Form IT-201. The instructions for that line cover a pension received as an officer, employee, or beneficiary of an officer or employee of the United States, its territories, possessions, agencies or instrumentalities, and they name the military in that list. Nothing is capped, and no age applies.
Line 26 also holds New York public pensions, so a retiree who later earned a New York State or local government pension subtracts both on the same line. One limit inside that rule: a member of the Optional Retirement Program may subtract only the share tied to SUNY, CUNY, or State Education Department employment, and payments funded by a salary-reduction supplemental annuity plan do not qualify.
Federal civilian pensions qualify too. Because line 26 reaches pensions of any officer or employee of the United States or its agencies, a CSRS or FERS annuity from a second career, including a Coast Guard civilian job, comes off in full beside the military pension. Periodic distributions from section 457 deferred compensation plans cannot be subtracted on line 26; the instructions route them to the line 29 exclusion.
On an assumed $36,000 pension, the subtraction kept $1,980 away from New York State tax for 2025 for a married couple filing jointly whose taxable income sat in the 5.5% bracket, which ran from $27,900 to $161,550. The department's 2026 estimated tax instructions set that bracket at 5.4%, so the same pension saves $1,944 for 2026. New York City and Yonkers residents also skip their local income tax on the pension, according to the department.
You still file. The 2025 instructions require a New York resident return from anyone who must file a federal return, even when every dollar is subtracted, and from anyone whose federal adjusted gross income plus New York additions exceeded $4,000. Filing is also how you recover any New York tax withheld from a civilian job.
Survivor Benefit Plan annuities
Exempt. The department's page for military personnel and veterans says military pension payments received as a retiree or as the retiree's beneficiary are totally exempt from New York State, New York City, and Yonkers income taxes, and the 2025 IT-201 instructions include a beneficiary of a federal officer or employee on line 26 (read October 9, 2026).
Active-duty pay in New York
Taxed for residents to the extent it is subject to federal income tax, according to the 2025 IT-201 instructions. Certain combat pay is subtracted through modification S-118, and organized militia pay for qualifying active service in New York through S-126.
Missed it in an earlier year?
The 2025 IT-201 instructions say a claim for credit or refund generally must be filed within the later of three years from the time you filed the return or two years from the time you paid the tax. Amend a full-year resident return on Form IT-201-X.
What trips New York retirees up
- Line 26 does not use up the $20,000 pension and annuity exclusion. Line 29 is reserved for pension and annuity income that did not come from a New York or federal government plan, so once you are 59 1/2 a military retiree can still exclude up to $20,000 of IRA, 401(k) or private pension income on top of the fully subtracted military pension.
- A former spouse's share depends on the court order. The 2025 instructions let a nonemployee spouse subtract federal pension distributions received under a qualified domestic relations order that meets IRC § 414(p)(1)(A), or under a domestic relations order issued by a New York court. A share paid under another state's divorce decree should be checked against that wording before it goes on line 26.
- New York cut its five lowest rates by a tenth of a point for 2026 under Chapter 59 of the Laws of 2025 (Part A). The department's 2026 estimated tax instructions show 3.9% to 5.9% where the 2025 schedule had 4% to 6%, and the brackets from 6.85% to 10.9% did not move. The cuts change the tax on wages and other taxable income only. The military pension stays fully subtracted either way.
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. New York’s other servicemember protections are on the New York SCRA page.
Frequently asked questions
Does New York tax military retirement?
No. N.Y. Tax Law § 612(c)(3)(ii) subtracts pensions paid to officers and employees of the United States and its agencies, to the extent they are in federal gross income, and the 2025 IT-201 instructions name the military on line 26. There is no age requirement and no dollar limit. The Department of Taxation and Finance page for military personnel and veterans says military pension payments are totally exempt from New York State, New York City, and Yonkers income taxes (read October 9, 2026).
Is military retirement taxed in New York City?
No. The department's page for military personnel and veterans says military pension payments you receive as a retiree, or as a beneficiary, are totally exempt from New York State, New York City, and Yonkers income taxes. You do not file a separate city return: New York City taxable income on line 47 of Form IT-201 generally starts from New York taxable income, which is figured after the line 26 subtraction. The Yonkers resident surcharge on line 55 is computed from the net state tax, so it never reaches the pension either.
Is SBP taxed in New York?
No. The Department of Taxation and Finance says military pension payments received as a retiree's beneficiary are totally exempt from state, New York City, and Yonkers tax, and the 2025 IT-201 instructions let a beneficiary of a federal officer or employee subtract the pension on line 26. A surviving spouse receiving a Survivor Benefit Plan annuity enters the federally taxable amount from the 1099-R on line 26 of Form IT-201 (read October 9, 2026).
Can I still use New York's $20,000 pension exclusion if I have a military pension?
Yes. The 2025 IT-201 instructions limit line 29, the pension and annuity income exclusion, to pension and annuity income that did not come from a New York State, local, or federal government plan. Your military pension is subtracted separately on line 26, so it does not count against the $20,000. Once you were 59 1/2 before January 1, 2025, you could exclude up to $20,000 of qualifying IRA, 401(k), or private pension income on line 29 as well. Married filers each figure their own exclusion.
Sources, read October 9, 2026
- Information for military personnel and veterans (New York State Department of Taxation and Finance)
- Instructions for Form IT-201, Full-Year Resident Income Tax Return, 2025 (New York State Department of Taxation and Finance)
- New York Tax Law § 612, New York adjusted gross income of a resident individual (New York State Senate)
- NYS-50-T-NYS (1/26), New York State Withholding Tax Tables and Methods (New York State Department of Taxation and Finance)
- Instructions for Form IT-2105, Estimated Tax Payment Voucher for Individuals, 2026 (New York State Department of Taxation and Finance)
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.