Is military retirement taxed in Oklahoma?

How it works in Oklahoma

Enter the taxable amount from your DFAS 1099-R on Schedule 511-A, line 4, Military Retirement. The 2025 Form 511 instructions say each individual may exclude 100% of retirement benefits from any component of the Armed Forces, so on a joint return a household with two military retirees excludes both pensions.

Then use line 6 for your other retirement money. The $10,000 Other Retirement Income exclusion covers distributions from IRC 401 plans, IRAs, 403 annuities and 457 plans, and the instructions reduce it only by amounts claimed on line 5 for Oklahoma government or federal civil service retirement. Nothing in the line 6 rule reduces it for the military exclusion on line 4, so a military retiree with IRA withdrawals can still exclude up to $10,000 of them.

If a 2022 or later return excluded only 75% of the pay, or $10,000, file an amended Form 511 for each year: put an X in the Amended Return box at the top of page 1, complete Schedule 511-I, and mail each year in its own envelope. The refund window runs three years from the due date, including any extension, so a 2023 return due in April 2024 can be fixed until April 2027. A 2022 return with no extension closed in April 2026.

At the 4.75% top rate for 2025, the exclusion on an assumed $36,000 pension is worth about $1,710 a year. For tax year 2026, 68 O.S. § 2355(D) cuts the top rate to 4.5%, the rate built into the Tax Commission's 2026 withholding tables, so the same exclusion is worth about $1,620. Under the pre-2022 rule, 75% of the same pension, $27,000, was excluded and $9,000 stayed taxable.

Moving to Oklahoma partway through a year? Part-year residents and nonresidents claim the same exclusion on Schedule 511NR-B of the Form 511NR packet, according to the Tax Commission's help center answer on military retirement (read October 9, 2026).

What trips Oklahoma retirees up

• The Tax Commission's help center contradicts itself. Its Income Tax answer to "Does Oklahoma tax all of my military retirement income?" says that beginning in tax year 2022 each individual may exclude 100%, but the Military Exemptions note on its Exemptions page still says a retiree may exclude the greater of $10,000 or 75% (both read October 9, 2026). The statute and the 2025 Form 511 instructions follow the 100% rule; the 75% figure describes tax years 2006 through 2021.
• The Legislature's Title 68 prints three versions of § 2358 because of conflicting amendments. The military retirement sentence is identical in all three, but it is paragraph 18 of subsection E in two versions and paragraph 17 in the third, so citations to it vary.
• The exclusion reaches benefits "from any component of the Armed Forces of the United States." Officers of the Public Health Service and NOAA Corps are uniformed but are not Armed Forces, and the Oklahoma statute and instructions do not mention their pensions.