Wisconsin retired pay

Is military retirement taxed in Wisconsin?

Not taxed

Exempt Since 2002, SBP and PHS Too.

No. Wisconsin exempts all retirement payments from the U.S. military retirement system, including Survivor Benefit Plan payments, plus retirement pay for service with the Coast Guard, the NOAA Corps or the Public Health Service. You subtract it on Schedule SB, line 12; 2001 Wis. Act 16 created the exemption for taxable years beginning on January 1, 2002.

The law: sec. 71.05(1)(am) and (an), Wis. Stats.
Current rule since: tax year 2002 (2001 Wis. Act 16, sections 2142m and 2142n, first applying to taxable years beginning on January 1, 2002 under section 9344 (9c); the Legislative Fiscal Bureau's January 2025 informational paper gives the same year)
Where you claim it: Schedule SB, line 12 (Military and uniformed services retirement benefits), filed with Form 1; Form 1NPR filers use Schedule M, line 46

Read on Wisconsin’s own sources October 10, 2026

What Wisconsin’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 Wisconsin’s 5.3% rate on 2025 taxable income around $75,000 (single); the top 7.65% starts over $323,290 for tax year 2025; change it to your own bracket if you know it.

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

Enter the taxable amount from the DFAS Form 1099-R on Schedule SB, line 12. The instructions limit the subtraction to the retirement payments you included in federal income, so the figure is the taxable amount, not the gross. Line 12 is added with the other subtractions on line 29 and carried to page 2 of the schedule.

The same line takes Coast Guard, NOAA Corps and Public Health Service retirement. Paragraph (an) of sec. 71.05(1) names those three services, and the instructions list them as the second category for line 12, so a PHS officer's retired pay and an Army retiree's pension land on one line.

On an assumed $36,000 pension, line 12 is worth $1,908 a year to a single filer whose Wisconsin taxable income sits in the 5.3% bracket both before and after the subtraction; for 2025 that bracket runs from $50,480 to $323,290. On the joint schedule the 5.3% bracket starts at $67,300.

Keep line 16 for other money. The retirement income subtraction there, up to $24,000 or $48,000 for certain joint filers who were at least 67 on December 31, 2025, applies only to qualified plan and IRA income not already removed on lines 12 through 15. Claiming it also gives up every credit on Schedule CR and on Form 1 lines 13 through 20 and 30 through 35 for the year.

Wisconsin gives you four years after the unextended due date to claim a refund. A return that missed line 12 can still be corrected on Form 1 with the amended return box checked and Schedule AR explaining the change; for a 2022 return, the deadline is April 2027.

Survivor Benefit Plan annuities

Exempt. The 2025 Schedule SB instructions put payments from the Retired Serviceman's Family Protection Plan and the Survivor Benefit Plan on line 12, and Publication 128 (1/26) says SBP payments from the military retirement system are exempt.

Active-duty pay in Wisconsin

Not taxed. Residents subtract basic, special, and incentive pay for active duty on Schedule SB, line 18 (sec. 71.05(6)(b)56., Wis. Stats.); basic pay for inactive duty training does not qualify.

Missed it in an earlier year?

Generally within 4 years after the unextended due date of the original return, for example April 15, 2030 for a 2025 return (2025 Form 1 instructions). File Form 1 with the amended return box checked and Schedule AR.

What trips Wisconsin retirees up

Combining military years into a civil service annuity costs part of the exemption. Publication 128 describes an Army retiree who merged 20 military years with 19 Postal Service years into one CSRS annuity: only the share attributable to the military retirement benefit is exempt, found by the years-of-service formula.
Civilian federal pensions get no matching exemption. Schedule SB, line 14 covers Civil Service Retirement System payments only for people who were members or retirees of the system by December 31, 1963, and Thrift Savings Plan payments do not qualify for that line. A Coast Guard officer's retired pay is exempt on line 12; a Coast Guard civilian's federal annuity gets no line 12 or line 14 subtraction.
The line 12 figure can never exceed what you included in federal income. A payment, or part of one, that was already excluded on the federal return is not subtracted a second time, so work from the taxable amount on the 1099-R rather than the gross distribution.
SBP is covered because of a partial veto. As the Legislature passed it, section 2142m of 2001 Wis. Act 16 exempted military retirement payments other than surviving spouse benefits; the published act marks those words vetoed in part, and sec. 71.05(1)(am) has read without them in every edition since.

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

Frequently asked questions

Does Wisconsin tax military retirement pay?

No. Under sec. 71.05(1)(am) and (an), Wis. Stats., Wisconsin exempts all retirement payments from the U.S. military retirement system and all retirement payments from the U.S. government tied to service with the Coast Guard, the NOAA Commissioned Corps or the Public Health Service Commissioned Corps. Subtract the amount included in federal income on Schedule SB, line 12 (Schedule M, line 46 on Form 1NPR). Sections 2142m and 2142n of 2001 Wis. Act 16 created both paragraphs, first applying to taxable years beginning on January 1, 2002 (read October 10, 2026).

Is SBP taxed in Wisconsin?

No. The 2025 Schedule SB instructions say the line 12 subtraction includes payments from the Retired Serviceman's Family Protection Plan and the Survivor Benefit Plan, which DFAS pays. Publication 128 (1/26) repeats that SBP payments from the military retirement system are exempt from Wisconsin income tax. A surviving spouse enters the taxable annuity from the 1099-R on line 12, limited to the amount included in federal income, and needs no age or income test to claim it.

Can I use Wisconsin's $24,000 retirement income subtraction on my military pension?

No. The 2025 Schedule SB instructions limit the line 16 subtraction, worth up to $24,000 or $48,000 for certain joint filers aged 67 or older, to qualified plan and IRA income that has not been removed on lines 12 through 15. Military retired pay is already fully subtracted on line 12. Claiming line 16 for other income, such as IRA or TSP withdrawals, also means giving up every Schedule CR credit and the credits on Form 1 lines 13 through 20 and 30 through 35 for 2025.

Is active duty pay taxed in Wisconsin?

Not the core pay. Wisconsin residents subtract basic, special, and incentive pay received for active duty on Schedule SB, line 18, under sec. 71.05(6)(b)56., Wis. Stats. That covers regular and reserve components, the Coast Guard, and Guard or Reserve members called to active federal service. Basic pay for inactive duty training and nontaxable allowances such as BAH do not go on line 18, per the 2025 instructions and Publication 128 (1/26).

Sources, read October 10, 2026

Know someone this saves money? Pass it on

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.