No, Mississippi does not tax military retirement pay. Under Mississippi Code Section 27-7-15, the state excludes qualified retirement income — including pensions from every branch of the Armed Forces — from taxable income, with no dollar cap and no age requirement.1Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions You subtract the full amount of your military pension from your federal adjusted gross income when you compute your Mississippi taxable income, so none of it is taxed by the state. Federal tax still applies to your military retired pay, and DFAS withholds it from your pension unless you opt out; the Mississippi exemption only eliminates the state portion.
What the Exemption Covers
The exemption reaches military retirement and retainer pay from the Army, Navy, Air Force, Marine Corps, Coast Guard, and Space Force. It applies regardless of how you qualified for the pension:
- Active-duty retirement pay earned after 20 or more years of service.
- Reserve and National Guard retirement pay that begins at age 60, or earlier under reduced-age provisions, once you have enough qualifying service.
- Disability retirement pay received after a medical retirement for a service-connected condition.
- Combat-Related Special Compensation (CRSC), which is tax-free at both the federal and state level.
Mississippi imposes no minimum age or length-of-service threshold beyond what the military itself requires for pension eligibility. If a payment is classified as military retired pay, the state treats it as exempt.2Mississippi VA. State Benefits for Veterans
Survivor annuities get the same treatment. Mississippi does not tax Survivor Benefit Plan (SBP) payments, Reserve Component Survivor Benefit Plan (RCSBP) payments, or Retired Serviceman’s Family Protection Plan (RSFPP) annuities received by a surviving spouse or other beneficiary.3The Official Army Benefits Website. Mississippi Military and Veterans Benefits
How to Report Exempt Retirement Pay on Your Mississippi Return
Even though the pension isn’t taxed, you still account for it on the return. Each January, DFAS issues a Form 1099-R showing your total military retirement distributions and any federal tax withheld during the year.4Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. You’ll use that figure on your state return.
Mississippi residents file Form 80-105, the Resident Individual Income Tax Return. On that form you report retirement income and then subtract the exempt amount so it does not enter your taxable income. Form 80-107, the schedule for retirement distributions, is where you detail pensions and annuities and identify the exempt portion. The military retirement amount comes out of your federal adjusted gross income to produce your Mississippi taxable income. Both forms are available through the Mississippi Department of Revenue website.
If your only income is exempt military retirement pay, you may still want to file a return — doing so documents the exemption and lets you claim a refund of any state tax that was withheld in error.
Residency Determines Whether You File in Mississippi at All
Your state tax obligations follow your state of legal residence, not where you are physically stationed. If you entered the military from Mississippi, the state presumes you are a Mississippi resident unless you formally changed your home of record to another state.1Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions Mississippi residents who retired from the military owe no state tax on their pension no matter where they now live, so long as they file as a Mississippi resident.
If you are not a Mississippi resident but you earn non-retirement income inside the state, such as wages from a civilian job, you file a non-resident return on Form 80-205 and only the Mississippi-sourced income is taxable there. A non-resident servicemember stationed in Mississippi under military orders is not taxed on military pay by the state, though other Mississippi-earned income can be.5Mississippi Department of Revenue. Resident, Non-Resident and Part-Year Resident Income Tax Instructions
Spouses of military members stationed outside Mississippi are considered Mississippi residents if the service member’s home of record is Mississippi, unless the spouse has taken steps to establish domicile in another state.1Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions
TSP and Early Withdrawals Are Treated Differently
The exemption is for retirement pay and qualified retirement distributions, not every dollar that comes out of a retirement account. Mississippi broadly exempts pensions, annuities, and retirement income once you have met the plan’s requirements for a qualifying distribution.1Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions Qualifying Thrift Savings Plan (TSP) withdrawals — those you take after meeting the plan’s age and separation requirements — are generally not taxed by Mississippi.3The Official Army Benefits Website. Mississippi Military and Veterans Benefits
Early distributions do not get that treatment. If you pull money from your TSP or another retirement account before meeting the plan’s requirements, Mississippi may treat the withdrawal as taxable income.1Mississippi Department of Revenue. Individual Income Tax Frequently Asked Questions For a servicemember who separates before retirement eligibility and taps the TSP early, that distribution can face both the federal 10% early withdrawal penalty and Mississippi’s 4% income tax.
Related Benefit: Property Tax Relief for Disabled Veterans
Income tax isn’t the only break available. A veteran with a service-connected total disability who received an honorable discharge is exempt from all ad valorem (property) taxes on the assessed value of their homestead, and the exemption extends to the un-remarried surviving spouse of a qualifying veteran.2Mississippi VA. State Benefits for Veterans Veterans aged 65 or older without a total disability rating may qualify for Mississippi’s additional homestead exemption, which removes the first $7,500 of assessed value from property taxes. Medal of Honor recipients and former prisoners of war are also exempt from ad valorem taxes on motor vehicles they own, and that benefit extends to their surviving spouses.
Property tax exemptions are administered at the county level. To apply, contact your county tax assessor’s office with your DD-214, your VA disability rating letter if applicable, and proof of homestead ownership.