Every military retirement forum eventually turns into the same argument: "Move to Texas, no state income tax." And sure, keeping more of your retirement pay matters. But if you pick a state purely for the tax break and end up three hours from the nearest VA hospital, paying $2,400 a month for a mediocre apartment, and competing with 500 other applicants for every decent job opening, how much did you really save?

I made this mistake. After separating from the Navy, I chased a low cost-of-living area without thinking about what I actually needed to build the next chapter. It took me 1.5 years of zero callbacks on government applications before I figured out the system. And a big part of that learning curve was understanding that where you plant your flag after retirement affects everything: your access to VA care, your job options, your spouse's career, and your long-term financial picture.

This guide ranks the best states for military retirees in 2026 based on the full picture. Taxes are one factor. They are not the only factor.

What Actually Matters When Picking a State After Military Retirement

Before we get into rankings, you need to know what we are measuring. Every "best state for veterans" list online uses different criteria, and many of them are built on outdated data or weightings that do not reflect what military retirees actually deal with day to day.

Here are the factors that matter, based on what I have seen from the 15,456+ veterans and military spouses we have helped at BMR, plus my own experience across six federal career fields and a tech sales career:

• State income tax treatment of military retirement pay - Does the state tax your pension? Partially exempt? Fully exempt? This one is straightforward and easy to look up.
• VA healthcare access - How many VA medical centers and community-based outpatient clinics (CBOCs) does the state have relative to its veteran population? Wait times vary wildly by region. The VA publishes facility-level wait time data on accesstocare.va.gov.
• Cost of living - A state with no income tax does not help if housing costs eat the difference. The Bureau of Economic Analysis publishes Regional Price Parities (RPPs) that compare real purchasing power across states.
• Veteran population density - States with large veteran populations tend to have more veteran-specific resources, employers who understand military experience, and established veteran networking groups. The Census Bureau's American Community Survey tracks this annually.
• Employment opportunities for retirees - Many military retirees are not done working. They are 38 to 50 years old with clearances, leadership experience, and technical skills. Federal installations, defense contractors, and veteran-friendly employers cluster in specific states. If you are planning a second career after military retirement, this matters more than the tax rate.
• Military installation proximity - Access to commissaries, exchanges, MWR facilities, and military healthcare through TRICARE network providers. Bases also anchor local economies and create jobs.
• State-level veteran benefits - Property tax exemptions, state veteran home loans, education benefits for dependents, hunting and fishing license discounts, and other programs that vary significantly by state.

The Top 10 States for Military Retirees in 2026

This ranking weighs all seven factors above. A state that dominates in one area but fails in three others will not make this list. You need a state that delivers across the board.

1. Virginia

Virginia is the gold standard for military retirees who want to keep working. The state is home to the Pentagon, dozens of defense contractors (Northrop Grumman, BAE Systems, General Dynamics, Leidos, Booz Allen Hamilton), and multiple major military installations including Joint Base Langley-Eustis, Naval Station Norfolk, Marine Corps Base Quantico, and Fort Barfoot.

Starting in 2022, Virginia began phasing in a military retirement income tax subtraction. For tax year 2025, up to $40,000 of military retirement income is exempt from state income tax. The cost of living in Northern Virginia is high, but Hampton Roads and the Richmond corridor offer substantially lower housing costs while keeping you within range of major employers and excellent VA facilities. The Hampton VA Medical Center and Hunter Holmes McGuire VA Medical Center in Richmond both serve large veteran populations.

If you hold a security clearance, Virginia is arguably the single best state in the country for monetizing it. The density of cleared positions in the D.C. metro area is unmatched.

2. Texas

Texas earns its reputation, but not just for the zero state income tax. The state has 17 VA medical centers and health care systems plus dozens of CBOCs, making it one of the best-served states for VA healthcare. Major installations like Fort Cavazos (formerly Fort Hood), Joint Base San Antonio, Fort Bliss, and Naval Air Station Corpus Christi anchor regional economies and create civilian employment.

San Antonio is arguably the most military-friendly city in the country. JBSA alone includes Lackland, Randolph, and Fort Sam Houston. The city has a massive veteran population, a reasonable cost of living compared to Austin or Dallas, and a well-established network of veteran service organizations. The defense and cybersecurity job markets in San Antonio have grown substantially over the past five years.

The downside: Texas property taxes are among the highest in the nation. Some counties run 2.5% or higher. If you buy a $350,000 home, you could be paying $8,000+ per year in property taxes. That erases part of the income tax savings. Run the full numbers before committing.

3. Florida

Another zero-income-tax state with strong military infrastructure. Florida has 8 VA medical centers and a large network of outpatient clinics. MacDill AFB, Naval Station Mayport, NAS Jacksonville, NAS Pensacola, Patrick Space Force Base, and Eglin AFB provide installation access across the state.

The Pensacola and Jacksonville areas offer lower cost of living with strong military community ties. The Tampa-St. Petersburg area combines MacDill AFB proximity with a growing tech and defense sector. Florida also offers a homestead exemption that reduces property tax assessments, and combat-disabled veterans can qualify for additional property tax exemptions.

The caution with Florida: homeowners insurance costs have spiked in recent years due to hurricane risk. In some coastal areas, annual insurance premiums can run $4,000 to $8,000 or more. Factor that into your housing budget alongside the property tax savings.

4. North Carolina

North Carolina exempts military retirement pay from state income tax as of 2021. That alone moves it up the list. But the state also has Fort Liberty (formerly Fort Bragg), Camp Lejeune, MCAS Cherry Point, and Seymour Johnson AFB, creating a strong military employment corridor through the eastern half of the state.

The Research Triangle (Raleigh-Durham-Chapel Hill) has become a major tech hub with growing demand for project managers, cybersecurity professionals, and operations leaders. Veterans with those skill sets from military service can find strong opportunities there. The Fayetteville and Jacksonville areas offer very low cost of living by national standards, and the Durham VA Medical Center and Fayetteville VA Medical Center serve the region.

North Carolina also offers property tax exemptions for disabled veterans and a state-funded scholarship program (the Scholarships for Children of Wartime Veterans) for dependents of certain disabled or deceased veterans.

5. Colorado

Colorado exempts military retirement pay from state income tax for retirees 55 and older, and partially exempts it for those under 55. The state is home to five major military installations: Fort Carson, Peterson Space Force Base, Schriever Space Force Base, Buckley Space Force Base, and the U.S. Air Force Academy.

Colorado Springs has become a hub for defense, aerospace, and cybersecurity employers. The concentration of Space Force and NORAD operations draws cleared contractors and federal agencies. The VA Eastern Colorado Health Care System in Denver is one of the larger VA systems in the country.

Cost of living is the trade-off. Denver and Colorado Springs have seen significant housing price increases over the past decade. A median home in Colorado Springs is around $450,000 as of early 2026. But if you are targeting high-paying civilian careers in defense or tech, the salaries often offset the housing costs.

6. Georgia

Georgia exempts up to $17,500 of military retirement income from state taxes for retirees under 62 (the threshold increases for those 62-64, and retirees 65+ get a larger exemption). The state is home to Fort Moore (formerly Fort Benning), Fort Stewart, Hunter Army Airfield, Robins AFB, and Kings Bay Naval Submarine Base.

The Warner Robins area around Robins AFB has a strong concentration of defense logistics and maintenance jobs. Atlanta offers a broad job market across multiple industries, and the cost of living outside metro Atlanta is among the lowest in the Southeast. The Atlanta VA Medical Center and the Charlie Norwood VA Medical Center in Augusta serve the state.

Georgia also passed legislation making it easier for military spouses to transfer professional licenses, which matters if your spouse is a nurse, teacher, or licensed professional looking to restart their career after a PCS-heavy decade.

7. Washington State

Washington has no state income tax. That covers your retirement pay, any second-career income, and investment gains. The state is home to Joint Base Lewis-McChord (one of the largest military installations in the western U.S.), Naval Base Kitsap, and Naval Station Everett.

The Puget Sound region has a massive tech sector (Amazon, Microsoft, Boeing) and a growing defense presence. Tacoma and Olympia offer more affordable housing than Seattle while staying within commuting distance of JBLM and federal job opportunities. The VA Puget Sound Health Care System operates facilities in Seattle and Tacoma.

The downside is the overall cost of living in western Washington. Housing in Seattle is expensive, and even Tacoma has climbed significantly. Eastern Washington (Spokane, Tri-Cities) offers lower costs but fewer military-connected employment opportunities. Sales tax is also high (6.5% state plus local additions that can push it above 10%).

8. South Carolina

South Carolina exempts up to $17,500 of military retirement pay from state income tax, with an additional deduction for retirees over 65. The state is working toward full exemption. Installations include Joint Base Charleston, Shaw AFB, Fort Jackson, Marine Corps Recruit Depot Parris Island, and MCAS Beaufort.

The Charleston area has become one of the faster-growing metros in the Southeast, with Boeing, Bosch, Volvo, and a growing tech sector alongside the military presence. The cost of living in Columbia and the Midlands region remains low. The Ralph H. Johnson VA Medical Center in Charleston and the Dorn VA Medical Center in Columbia serve the veteran population.

South Carolina also offers a property tax exemption for the first $50,000 of a primary residence's fair market value for all homeowners, and additional exemptions for disabled veterans.

9. Tennessee

Tennessee has no state income tax on wages or retirement income. The state is home to Fort Campbell (shared with Kentucky) and Naval Support Activity Mid-South in Millington. Nashville, Memphis, Knoxville, and Chattanooga all offer different cost-of-living and employment profiles.

The Nashville area has seen significant job growth in healthcare, tech, and corporate headquarters over the past five years. Clarksville (adjacent to Fort Campbell) offers very affordable housing and a large veteran community. The Tennessee Valley Healthcare System (VA) operates facilities in Nashville and Murfreesboro.

Tennessee does have a relatively high combined state and local sales tax (9.548% on average, among the highest in the nation). Property taxes, however, are among the lowest. The net effect depends on your spending patterns vs. your property value.

10. Maryland

Maryland fully exempts military retirement pay from state income tax as of 2022. The state's location in the D.C. metro area gives retirees access to the same defense contractor and federal employment corridor as Virginia. Fort Meade (home of NSA and U.S. Cyber Command), Joint Base Andrews, Aberdeen Proving Ground, and the Naval Academy in Annapolis are major installations.

For retirees with intelligence, cyber, or communications backgrounds, Maryland offers some of the highest-paying cleared positions in the country. The Fort Meade corridor between Baltimore and D.C. is dense with NSA-adjacent contractors. The Baltimore VA Medical Center and the Perry Point VA Medical Center serve the region.

Cost of living in the D.C. suburbs is high, but areas like Frederick, Hagerstown, and parts of Anne Arundel County offer more affordable options while keeping you within an hour of major employers. If you are looking to start a new career after 20 years in the military, the D.C.-Maryland-Virginia triangle is hard to beat for sheer volume of opportunities.

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States That Look Good on Paper but Have Real Drawbacks

Some states show up on every "best for veterans" list but have specific issues that military retirees should weigh carefully.

Nevada has no state income tax and decent cost of living outside Las Vegas. But VA healthcare access is limited. The VA Sierra Nevada Health Care System in Reno and the VA Southern Nevada Healthcare System in North Las Vegas serve the entire state, and wait times for specialty care can be long. The state also has a relatively small defense employer base compared to states with major installations.

Alaska has no state income tax and actually pays residents an annual Permanent Fund Dividend. But the cost of living is among the highest in the nation (groceries, heating, transportation). VA healthcare access is limited outside Anchorage. If you do not have a specific reason to be in Alaska (land, family, outdoor lifestyle), the financial math usually does not work out.

California has a massive military footprint (Camp Pendleton, Fort Irwin, Naval Base San Diego, Travis AFB, Edwards AFB, multiple others) and excellent VA facilities. But the state fully taxes military retirement pay, has the highest state income tax rates in the country, and the cost of living in most military-adjacent areas (San Diego, the Bay Area, LA) is extremely high. Some retirees make it work in more affordable inland areas, but the tax burden is real.

New York exempts military retirement pay from state income tax, which is good. But the overall cost of living, property taxes, and limited military installation presence outside Fort Drum and West Point make it a tough sell for retirees who want to be near a military community. Some veterans settle in upstate New York where costs are lower, but job markets in those areas can be thin.

How Your Second Career Changes the Equation

If you are retiring at 20 years, you are probably somewhere between 38 and 45 years old. You have decades of work ahead of you. The "best state" for a retiree who plans to fish and golf every day is different from the best state for a retiree who wants to build a second career in federal service, defense contracting, or tech.

For federal employment, the states with the most federal civilian jobs per capita are Virginia, Maryland, D.C. (not a state, but relevant), Alaska, Hawaii, and New Mexico. Virginia and Maryland dominate because of the D.C. proximity. If you are targeting GS positions, living within commuting distance of a federal hub matters for networking, interviews, and the growing hybrid work arrangements that still require periodic in-office presence.

For defense contractor jobs, the clusters are clear: Northern Virginia, the Maryland I-95 corridor around Fort Meade, Colorado Springs, Huntsville (Alabama), San Antonio, and Hampton Roads (Virginia). If you have an active clearance, check out our breakdown on what your clearance is actually worth to understand the salary premium by region.

For tech careers, the traditional hubs (San Francisco, Seattle, Austin) are being supplemented by emerging markets in Raleigh, Nashville, Tampa, and Salt Lake City. Many of these newer tech cities have lower costs of living and growing veteran communities.

For healthcare or skilled trades, your options are broader because those jobs exist everywhere. The "best state" question for a retiree going into nursing or HVAC is more about cost of living and quality of life than employer concentration.

The veteran unemployment data from BLS shows that veteran unemployment nationally sits below the general population rate. But that national number hides significant regional variation. States with strong military infrastructure and defense economies tend to have the best outcomes for veteran job seekers.

The Spouse Factor That Nobody Talks About

Your spouse's career matters as much as yours when picking a state. After years of PCS moves, many military spouses have career gaps, interrupted professional licensing, or degrees they have not been able to fully use. Where you retire determines whether your spouse can rebuild.

Some states have made real progress on military spouse professional license reciprocity. According to the Department of Defense, over 30 states have enacted some form of interstate licensing compact participation or military spouse license transfer legislation. But the details vary. A nursing license might transfer easily while a real estate license requires retaking the state exam.

States with strong job markets and license reciprocity for military spouses include Virginia, Texas, Colorado, North Carolina, and Florida. Georgia recently strengthened its spouse licensing provisions as well.

If your spouse is a remote worker, this factor matters less. But if they need in-person employment in a licensed field, check the specific state's rules for their profession before you commit to a move. The National Conference of State Legislatures tracks military spouse licensing legislation by state.

VA Healthcare Access: The Factor You Cannot Ignore

TRICARE covers you as a retiree, but many military retirees also use VA healthcare for some or all of their care, especially for service-connected conditions. The difference between living 20 minutes from a VA medical center and living 2 hours from the nearest CBOC is real.

States with the best VA healthcare infrastructure relative to their veteran populations include Virginia, Texas, Florida, North Carolina, and California. The VA publishes average wait times by facility on accesstocare.va.gov. Before picking a state, look up the specific VA facility you would use and check their current wait times for primary care and the specialty services you need.

States with large geographic areas and dispersed populations (Montana, Wyoming, the Dakotas, Alaska) tend to have longer travel times to VA facilities. The VA's Community Care program lets you see civilian providers when wait times or travel distances exceed certain thresholds, but the approval process is not always smooth.

If you are weighing your education benefits like VR&E vs the GI Bill, proximity to a VA Regional Office also matters. VREO (Vocational Rehabilitation and Employment Officer) meetings, counseling sessions, and program check-ins can require in-person visits depending on your plan.

How to Make Your Decision: A Practical Framework

Ranking lists are useful as starting points. But the best state for you depends on your specific situation. Here is how to work through it:

Step 1: Define your post-retirement plan. Are you working or fully retired? If working, what industry? Federal, defense contractor, private sector, entrepreneurship? This determines which employment clusters matter.

Step 2: Run the real tax math. Do not just look at income tax. Calculate your total tax burden: state income tax on retirement pay, state income tax on second-career income (if applicable), property tax on the type of home you want, sales tax on your estimated spending, and vehicle registration/personal property taxes. Some states with no income tax make up the revenue through higher property or sales taxes.

Step 3: Check VA healthcare access for YOUR needs. Go to accesstocare.va.gov and look up the specific facility. Check wait times for primary care, mental health, and any specialty services you use. Look at distance from the neighborhoods you are considering.

Step 4: Price out actual housing. Use Zillow, Redfin, or Realtor.com to look at real listings in the specific cities and neighborhoods you are considering. Do not rely on state-level median prices. There is an enormous difference between living in San Antonio vs. Austin, or between Hampton Roads and Northern Virginia.

Step 5: Factor in your spouse's career needs. Research license reciprocity for their specific profession. Look at job listings in their field in the metro area you are targeting. Check if there are remote work options that make location less critical for them.

Step 6: Visit before committing. Spend a week in the area. Drive the commute routes. Walk through the neighborhoods. Visit the VA facility. Talk to other veterans who live there. The vibe of a place matters, and you cannot get that from a spreadsheet.

If you are heading into a second career and need to get your resume right for the civilian or federal market, that is a separate problem worth solving before you move. Use the BMR military resume builder to translate your experience into a resume that actually works for the job market in your target state. If you are exploring what civilian careers match your military background, the military-to-civilian career crosswalk can show you what is out there, including salary ranges and federal positions by location.

What to Do Next

Do not pick a state based on a single factor. The retirees who end up frustrated are the ones who chased a tax break and ignored everything else. The ones who land well are the ones who thought about employment, healthcare, cost of living, spouse needs, and community before making the move.

Start with the top 10 list above, narrow it to your top 3 based on your career plan and family needs, then run the numbers for each one. If you already know which state you are heading to and need to get your job search materials ready, build your resume with BMR and start applying before you relocate. Having a job lined up turns a stressful move into a confident one.

For state-by-state details on how military retirement pay is taxed, check out our guide on the best states for veteran employment and tax benefits.