Active-duty pay
Fully Exempt
Active-duty pay earned outside PA exempt; combat zone exempt entirely.
State Guide · PA
Pennsylvania — Military Tax Treatment
Pennsylvania has one of the best retirement tax environments in the country — it does not tax any retirement income, including military retirement and SBP. The active duty and Guard pay exemption is limited to pay earned outside PA.
Tax treatment at a glance
Guard & Reserve drill pay
Taxed
Pennsylvania's active duty exemption is for pay earned OUTSIDE Pennsylvania. Guard members who live and drill in PA are performing in-state service — drill pay is taxable PA income.
Military retirement pay
Fully Exempt
Military retirement pay fully exempt (PA does not tax retirement income generally).
The numbers · verified for tax year 2025
Top marginal rate
3.07%
Retirement-pay exemption
Full
Pennsylvania does not tax any retirement income, including military retirement pay — fully exempt. PA-resident active-duty pay earned outside Pennsylvania is also not taxable, though active-duty and drill pay earned inside PA is taxable compensation.
Standard deduction
Pennsylvania is a long-standing flat 3.07% with no graduated brackets and no standard deduction.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — Pennsylvania included.
Survivor Benefit Plan (SBP)
Follows retirement
Pennsylvania does not tax retirement income generally — SBP annuities are exempt.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in Pennsylvania, Pennsylvania cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to Pennsylvania can keep Texas as their tax domicile and avoid Pennsylvania state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether Pennsylvania exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01PA generally does not tax pension or retirement income — military retirees typically owe nothing to PA on retirement checks
- 02Guard members drilling in PA: drill pay is taxable PA income
- 03Confirm city/municipality wage tax if you live in Philadelphia or Pittsburgh — local earned income taxes apply separately
Veteran-specific tax benefits
Disabled veteran property tax exemption.
Official authority
https://www.revenue.pa.gov/ ↗State tax law changes annually. Verify current rules with the Pennsylvania Department of Revenue before making any tax decision.
Pennsylvania military tax — common questions
Does Pennsylvania tax military retirement pay in 2026?
Pennsylvania fully exempts military retirement pay. Military retirement pay fully exempt (PA does not tax retirement income generally).
Does Pennsylvania tax active-duty military pay?
Pennsylvania fully exempts active-duty military pay for state residents. Active-duty pay earned outside PA exempt; combat zone exempt entirely. Under the SCRA, Pennsylvania can only tax the military pay of service members who are legally domiciled in Pennsylvania — not those merely stationed there.
Does Pennsylvania tax National Guard and Reserve drill pay?
Pennsylvania taxes Guard and Reserve drill pay. Pennsylvania's active duty exemption is for pay earned OUTSIDE Pennsylvania. Guard members who live and drill in PA are performing in-state service — drill pay is taxable PA income.
Is VA disability compensation taxed in Pennsylvania?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including Pennsylvania — taxes it as income.
If I'm stationed in Pennsylvania but claim another state, can Pennsylvania tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, Pennsylvania cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides