Active-duty pay
No State Income Tax
No state income tax on wages.
State Guide · TN
Tennessee — Military Tax Treatment
Tennessee repealed its Hall Tax on investment income in 2021 — now truly no state income tax of any kind. Military pay, retirement, Guard drill pay: all tax-free at the state level.
Tax treatment at a glance
Guard & Reserve drill pay
No State Income Tax
No state income tax. Guard and Reserve drill pay not taxed.
Military retirement pay
No State Income Tax
No state income tax.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — Tennessee included.
Survivor Benefit Plan (SBP)
Follows retirement
No state income tax — SBP not taxed in Tennessee.
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 Tennessee, Tennessee 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 Tennessee can keep Texas as their tax domicile and avoid Tennessee 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 Tennessee exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01No state income tax return required.
Veteran-specific tax benefits
Veteran property tax relief for elderly/disabled vets.
Official authority
https://www.tn.gov/revenue.html ↗State tax law changes annually. Verify current rules with the Tennessee Department of Revenue before making any tax decision.
Tennessee military tax — common questions
Does Tennessee tax military retirement pay in 2026?
Tennessee does not tax military retirement pay. No state income tax.
Does Tennessee tax active-duty military pay?
Tennessee does not tax active-duty military pay for state residents. No state income tax on wages. Under the SCRA, Tennessee can only tax the military pay of service members who are legally domiciled in Tennessee — not those merely stationed there.
Does Tennessee tax National Guard and Reserve drill pay?
Tennessee does not tax Guard and Reserve drill pay. No state income tax. Guard and Reserve drill pay not taxed.
Is VA disability compensation taxed in Tennessee?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including Tennessee — taxes it as income.
If I'm stationed in Tennessee but claim another state, can Tennessee 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, Tennessee cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides