Best States for Military Retirees in 2026: Taxes, Cost of Living, and More

The retirement ceremony ends. The shadow box closes. And for the first time in years, sometimes decades, the next destination isn’t printed on orders. Now, for the first time in a long time, you choose the zip code.

Across the United States, more than 1.5 million retired service members receive military retirement pay, and where they settle usually comes down to a handful of the most important things, like: How far will my pension stretch? How much does housing cost? Is there a reliable VA hospital nearby? And if retirement includes a second career, are there real job opportunities?

These states were selected based on tax policy, affordability, healthcare access, and post-service employment opportunity, the same factors many retirees weigh when deciding where to put down roots. Talk to enough retirees, and a handful of states always stand out, not because they’re perfect, but because they consistently check the boxes that matter most to Veterans.

States With Strong Tax Benefits for Military Retirees

Taxes can quietly chip away at retirement income. Some states remove that concern entirely by not taxing personal income, including military pensions.

Texas

Among recently retired service members, Texas often comes up. Why? Because Texas has no state income tax, which means military retirement pay isn’t taxed at the state level. Texas also offers significant property tax exemptions for qualifying disabled Veterans, something that can make a noticeable difference in long-term housing costs.

Florida

Florida has drawn military retirees for decades. Like Texas, the state does not impose a personal income tax, allowing Veterans to keep more of their retirement income. The state’s large Veteran population has also helped support extensive Veteran services and a broad network of VA healthcare facilities.

Tennessee

Tennessee eliminated its Hall income tax in 2021 and does not tax personal income, including military retirement pay. That change, combined with moderate housing costs, has made cities like Nashville, Knoxville, and Chattanooga increasingly attractive destinations for military retirees.

Affordable States Many Military Retirees Consider

For retirees on pensions or fixed incomes, affordability is as important as state tax policy. Housing, utilities, and expenses vary widely across the country.

Alabama

Alabama frequently appears on lists of the most affordable states to live in. Military retirement pay is fully exempt from Alabama state income tax, and housing prices remain well below the national average. Installations such as Maxwell Air Force Base and Redstone Arsenal also help sustain strong Veteran communities across the state.

Oklahoma

Oklahoma combines a relatively low cost of living with a tax policy that exempts military retirement benefits from state income tax beginning with tax year 2022. Lower home prices and lower everyday expenses can make the state appealing to retirees who want their pensions to stretch further.

Mississippi

Mississippi consistently ranks among the least expensive states in the country. Military retirement income is fully exempt from Mississippi state income tax, and housing costs remain among the lowest nationwide.

States With Large VA Healthcare Networks

As Veterans age, access to healthcare is crucial. While TRICARE covers retirees, living near VA facilities makes care easier to access. Several states maintain particularly large VA healthcare networks.

Virginia

Virginia is home to one of the country’s largest military and Veteran healthcare ecosystems. Multiple VA medical centers operate across the state, and retirees living in northern Virginia remain close to major military treatment facilities in the National Capital Region.

Florida

Florida’s large Veteran population has expanded the VA healthcare system, including the addition of hospitals and clinics.

Texas

Texas operates one of the largest VA healthcare systems in the United States, with many hospitals and clinics serving Veterans across the state.

States With Large Defense and Veteran Employment Hubs

Many military retirees leave active-duty service in their 30s, 40s, or early 50s and pursue second careers. States with major defense industries, federal employment centers, and growing technology sectors have a strong reputation for providing strong opportunities for veterans.

Virginia

Northern Virginia has become one of the country’s largest centers for federal employment and defense contracting. Cybersecurity firms, intelligence agencies, and government contractors employ large numbers of Veterans across the region.

Texas

Texas’s economy supports jobs across defense, aerospace, energy, and technology. Cities like San Antonio and Austin increasingly attract Veterans entering civilian careers.

Colorado

Colorado has grown into a prominent hub for aerospace and defense innovation. Installations such as Peterson Space Force Base and Buckley Space Force Base help anchor a strong defense-sector workforce.

Veteran Benefits and Support Programs

Some states go beyond tax policy and employment opportunities by offering programs specifically designed to support Veterans and their families.

Texas

Texas offers one of the most extensive Veteran benefit packages in the country. The Hazelwood Act allows eligible Veterans and their dependents to receive tuition assistance at Texas public colleges.

South Carolina

South Carolina has become a popular retirement destination for many Veterans, partly because of property tax relief programs for qualifying disabled Veterans and a strong military presence around installations such as Fort Jackson and Joint Base Charleston.

Virginia

Virginia provides property tax relief for certain disabled Veterans and supports employment and transition programs through the Virginia Department of Veterans Services.

FAQs About Military Retirement Locations

Where do many retired military members live?

Financial research site WalletHub regularly evaluates how states support military retirees using metrics such as cost of living, Veteran population, job opportunities, and access to medical care. In its latest ranking of the best states for military retirees, WalletHub lists its top 10 picks:

1. South Carolina
2. Maryland
3. New Hampshire
4. North Dakota
5. Virginia
6. Alaska
7. Florida
8. Maine
9. South Dakota
10. Wyoming

Additional states we give honorable mention to appear later in the ranking, including Alabama (#12), Oklahoma (#20), Texas (#21), and Colorado (#35).

Which state offers the best benefits for Veterans?

Texas is frequently cited among the strongest states for Veteran benefits, thanks to programs such as the Hazelwood Act, property tax exemptions for disabled Veterans, and extensive Veteran services.

Do all states tax military retirement pay?

No. Many states fully exempt military retirement pay from state income taxes, while others provide partial exemptions. Because tax laws change periodically, Veterans should verify current policies with their state revenue department before deciding where to retire.

After decades of moving for the mission, retirement puts your life choices back in your hands. Some Veterans seek lower taxes, others prefer access to military communities, VA hospitals, or booming job markets. The best destination for you depends on which factors matter most for your next chapter.