Mississippi Military Retirement Taxes 2026: Complete Tax Guide for Veterans

Why Mississippi Is a Hidden Gem for Military Retirement

Mississippi stands out as one of the most affordable and tax-friendly states for military retirees. While often overlooked, Mississippi offers exceptional value: 100% exemption on military retirement pay, the lowest cost of living in the nation, generous property tax breaks for disabled veterans, and a strong military presence with multiple bases.

Beyond the tax benefits, Mississippi provides affordable housing (median home price ~$170,000), mild winters with warm summers, rich military history and heritage, a supportive veteran community, excellent outdoor recreation (Gulf Coast beaches, lakes, hunting, fishing), and Southern hospitality with low-stress living.

2026 Mississippi Military Retirement Tax Breakdown

State Income Tax on Military Retirement Pay

🎉 100% EXEMPT from Mississippi State Income Tax!

Mississippi fully exempts ALL military retirement pay from state income tax. This applies to retirement from active duty, reserves, and National Guard, regardless of rank or years of service. Your entire military pension is tax-free at the state level (subject only to federal income tax).

Note: Mississippi's general income tax rates range from 4% to 5%, but military retirees pay ZERO state tax on their pension.

VA Disability Compensation

✓ Completely Tax-Free

VA disability payments are tax-exempt at both the federal and Mississippi state levels. Whether you receive 10%, 100%, or any rating in between, you keep every dollar.

Property Tax Exemptions for Veterans (2026)

Disability Rating	Property Tax Benefit	Requirements
100% Service-Connected	100% exemption from all ad valorem taxes on homestead	Total service-connected disability
Any Service-Connected	Homestead exemption up to $75,000 assessed value	Any service-connected disability, Mississippi resident
Surviving Spouse (KIA)	Property tax exemption on homestead	Spouse of service member killed in action

Real Example: How Much You'll Save in Mississippi (2026)

Let's compare a military retiree in Mississippi vs. a high-tax state:

Example Scenario: E-7 Retired After 20 Years

• Military retirement pay: $2,800/month ($33,600/year)
• VA disability (70%): $1,916/month ($22,992/year)
• Part-time civilian job: $25,000/year
• Total annual income: $81,592

Mississippi

Military retirement: $0 tax
VA disability: $0 tax
Civilian income: ~$1,000 state tax

State tax: $1,000

New York (6.85% bracket)

Taxes all income sources heavily

State tax: ~$3,400

Annual Mississippi Savings: $2,400+

Over 20 years of retirement: $48,000+ saved

Cost of Living in Mississippi for Military Retirees (2026)

Mississippi has the LOWEST cost of living in the United States, approximately 15-20% below the national average:

📍 Housing Costs

• Median home price: ~$170,000
• Median rent (2BR): ~$900/month
• Property taxes: Very low (0.61% avg rate)
• 30-40% cheaper than national average

🛒 Living Expenses

• Groceries: 10% below national average
• Utilities: 5-10% below average
• Healthcare: Below national average
• Gas/Transportation: Slightly below average

💰 Purchasing Power Example

A $3,000/month military pension in Mississippi has the same purchasing power as approximately $3,500-3,700/month in higher cost-of-living states like California or New York.

Military Installations in Mississippi (2026)

Mississippi has several major military installations supporting over 40,000 active duty, reserve, and civilian personnel:

✈️ Keesler Air Force Base (Biloxi)

• Home of the 2nd Air Force
• Premier electronics and cyber training center
• 13,000+ military and civilian personnel
• Major employer on Mississippi Gulf Coast

✈️ Columbus Air Force Base

• Specialized Undergraduate Pilot Training (SUPT)
• Home of 14th Flying Training Wing
• Trains over 350 pilots annually
• Economic impact of $450+ million

⚓ Naval Air Station Meridian

• Naval aviator advanced strike jet training
• Training Air Wing ONE
• T-45C Goshawk training
• Critical to Navy pilot pipeline

🎖️ Camp Shelby Joint Forces Training Center

• Largest National Guard training site in nation
• 134,000+ acres
• Pre-deployment training hub
• Trains 100,000+ military personnel annually

Retiree Benefits: Access to base facilities including commissary, exchange, medical/dental, MWR, fitness centers, and more. Keesler AFB has exceptional facilities and is located on the beautiful Mississippi Gulf Coast.

Education Benefits for Veterans & Dependents (2026)

🎓 Mississippi Veteran and Servicemember Tuition Assistance

100% disabled veterans receive FREE TUITION at Mississippi public colleges and universities.

👨‍👩‍👧 Children of Armed Service Personnel Scholarship

Children of veterans who were killed in action or died from service-connected disabilities receive FREE TUITION at Mississippi public universities.

🎓 Yellow Ribbon Program

All Mississippi public universities participate in the Yellow Ribbon Program, covering tuition gaps for Post-9/11 GI Bill recipients.

Best Cities for Military Retirees in Mississippi (2026)

🏖️ Biloxi/Gulfport (Gulf Coast)

Why: Beautiful beaches, Keesler AFB access, casinos, fishing, mild winters, growing economy
Population: Metro area 400,000+
Housing: $180,000 median
Best for: Beach lovers, retirees wanting year-round recreation

🎓 Hattiesburg

Why: University town (USM), affordable, excellent healthcare, arts & culture, near Camp Shelby
Population: 47,000 (metro 170,000)
Housing: $165,000 median
Best for: Families, education-focused retirees

🏛️ Jackson (Capital)

Why: State capital, largest city, VA medical center, job opportunities, cultural attractions
Population: Metro 580,000+
Housing: $145,000 median
Best for: Those wanting urban amenities with affordability

✈️ Columbus

Why: Columbus AFB, affordable housing, safe community, family-friendly
Population: 24,000
Housing: $140,000 median
Best for: Air Force retirees, quiet living with base access

🎣 Tupelo

Why: Elvis Presley's birthplace, low cost of living, excellent schools, strong economy, outdoor recreation
Population: 38,000
Housing: $155,000 median
Best for: Small town living with modern amenities

Pros & Cons of Retiring in Mississippi

✅ PROS

✓ 100% exemption on military retirement pay
✓ Lowest cost of living in United States
✓ Ultra-affordable housing ($170k median)
✓ Property tax exemptions for disabled veterans
✓ No tax on Social Security benefits
✓ Multiple military bases with full facilities
✓ Gulf Coast beaches - beautiful coastline
✓ Mild winters - warmer than northern states
✓ Strong veteran community and support
✓ Excellent outdoor recreation - hunting, fishing, boating
✓ No estate or inheritance tax
✓ Southern hospitality - friendly culture

❌ CONS

✗ Hot, humid summers - 90°F+ common
✗ Hurricane risk on Gulf Coast
✗ Education rankings - lower than some states
✗ Healthcare access - limited in rural areas
✗ Lower average incomes - fewer high-paying jobs
✗ Public transportation - car dependent
✗ Sales tax - 7% state sales tax rate
✗ Poverty rate - higher than national average

VA Healthcare in Mississippi

Mississippi has two VA Medical Centers and multiple outpatient clinics:

🏥 VA Medical Centers

Jackson VA Medical Center - Full-service facility with specialty care
Biloxi VA Medical Center - Comprehensive healthcare including mental health, surgery, rehabilitation
Multiple CBOCs - Outpatient clinics in Hattiesburg, Meridian, Natchez, Greenville, and more

Frequently Asked Questions (FAQs)

Does Mississippi tax military retirement pay?

No. Mississippi FULLY EXEMPTS all military retirement pay from state income tax. This includes retirement from active duty, reserves, and National Guard. Your entire military pension is tax-free at the state level, regardless of your rank or years of service. You'll only pay federal income tax.

What property tax exemptions do veterans get in Mississippi?

Mississippi offers property tax exemptions for disabled veterans: 100% service-connected disability gets full exemption from all ad valorem taxes on homestead property. Veterans with service-connected disabilities also qualify for an additional homestead exemption of up to $75,000 assessed value. Surviving spouses of service members killed in action receive property tax exemptions.

Is Mississippi a good state for military retirees?

Yes, Mississippi is excellent for budget-conscious military retirees. With no tax on military retirement pay, very low cost of living (15-20% below national average), affordable housing, multiple military installations, and property tax exemptions for disabled veterans, Mississippi offers exceptional value. The state has a strong military heritage and supportive veteran community.

What military bases are in Mississippi?

Mississippi has several major military installations: Keesler Air Force Base (Biloxi) - 2nd Air Force training center with 13,000+ personnel; Columbus Air Force Base - Specialized Undergraduate Pilot Training; Naval Air Station Meridian - Naval aviator training; Camp Shelby Joint Forces Training Center - one of the largest National Guard training sites in the nation. These bases support over 40,000 active duty, reserve, and civilian personnel.

Does Mississippi offer free college tuition for veterans?

Yes. Mississippi offers free tuition at state colleges and universities for eligible veterans and dependents. The Mississippi Veteran and Servicemember Tuition Assistance Program waives tuition for 100% disabled veterans. Additionally, children of veterans who were killed in action or died from service-connected disabilities can receive free tuition at Mississippi public universities through the Children of Armed Service Personnel Scholarship. The state also participates in the Yellow Ribbon Program.

Does Mississippi tax Social Security benefits?

No. Mississippi does NOT tax Social Security benefits. This is in addition to the military retirement pay exemption, making Mississippi very tax-friendly for retirees with multiple income sources.

How does Mississippi's cost of living compare to other states?

Mississippi has the LOWEST cost of living in the United States, approximately 15-20% below the national average. Housing is especially affordable with a median home price around $170,000. This means your military pension stretches much further than in high-cost states.

Are there commissary and exchange privileges in Mississippi?

Yes. Military retirees can access commissaries and exchanges at Keesler AFB (Biloxi), Columbus AFB, NAS Meridian, and Camp Shelby. These provide substantial savings on groceries, household items, and tax-free shopping.

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🎯 Quick Summary: Mississippi Military Retirement Taxes (2026)