Pennsylvania Military Retirement Taxes 2026: Complete Tax Guide

Why Pennsylvania Is Excellent for Military Retirement

Pennsylvania stands out as one of the most veteran-friendly states in the nation. With a 100% exemption on ALL military retirement pay (no age requirement, no income limit), Pennsylvania allows you to keep your entire military pension tax-free at the state level.

Beyond the exceptional tax benefits, Pennsylvania offers four seasons with distinct weather patterns, rich historical significance (home to Valley Forge, Gettysburg), major military installations including Carlisle Barracks (U.S. Army War College), excellent VA healthcare with 4 major medical centers, diverse living options from Philadelphia and Pittsburgh to rural areas, and a moderate cost of living outside major cities.

2026 Pennsylvania Military Retirement Tax Breakdown

State Income Tax on Military Retirement Pay

🎉 100% Exempt - No Restrictions!

Pennsylvania offers a complete 100% exemption on ALL military retirement pay. There are NO age requirements, NO income limits, and NO phase-outs. Whether you're 40 or 70, whether you have $30,000 or $300,000 in total income, your military pension is fully exempt from Pennsylvania's 3.07% state income tax.

VA Disability Compensation

✓ Completely Tax-Free

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

Pennsylvania State Income Tax (2026)

Income Type	Tax Rate	Notes
Military retirement pay	0% (Exempt)	100% exempt - no limits
VA disability	0% (Exempt)	All ratings exempt
Other income (wages, business)	3.07%	Flat rate on taxable income
Social Security benefits	0% (Exempt)	Not taxed by Pennsylvania

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

Let's compare a military retiree in Pennsylvania vs. Virginia to see the tax savings:

Example Scenario: O-4 Retired After 20 Years

• Military retirement pay: $3,600/month ($43,200/year)
• VA disability (50%): $1,075/month ($12,900/year)
• Civilian job: $45,000/year
• Total annual income: $101,100

Pennsylvania (100% Exempt)

Military pension: $0 tax (100% exempt)

Civilian income: $45,000 × 3.07% = $1,382

State tax: $1,382

Virginia (Partial Exemption)

Some military pension taxed after deduction

All civilian income taxed at 5.75%

State tax: ~$3,200

Annual Pennsylvania Savings: $1,818

Over 20 years of retirement: $36,360 saved

Cost of Living in Pennsylvania for Military Retirees (2026)

Pennsylvania's cost of living varies significantly by region. Overall, Pennsylvania is approximately 2-3% below the national average, but major metros are higher:

Category	vs National Average	Notes
Overall	2-3% below	Varies by region
Housing	Varies widely	Philadelphia +10%, rural areas -20%
Healthcare	Slightly above	Excellent VA facilities
Groceries	At average	Competitive prices
Utilities	5% above	Heating costs in winter
Transportation	Below average	Lower gas prices

Military Presence in Pennsylvania

Pennsylvania has several major military installations providing excellent base access and a strong veteran community:

🎖️ Army Installations

Carlisle Barracks (Carlisle) - U.S. Army War College
Fort Indiantown Gap (Annville) - National Guard training center
Tobyhanna Army Depot (Tobyhanna) - Electronics maintenance
Letterkenny Army Depot (Chambersburg) - Missile and munitions

✈️ Air Force & Navy

193rd Special Operations Wing (Harrisburg) - Air National Guard
Naval Support Activity Mechanicsburg - Navy logistics
Defense Distribution Center Susquehanna (New Cumberland)

Veteran Healthcare Facilities

Pennsylvania has 4 major VA medical centers and numerous community-based outpatient clinics:

• VA Pittsburgh Healthcare System

• Corporal Michael J. Crescenz VA Medical Center (Philadelphia)

• Lebanon VA Medical Center

• Wilkes-Barre VA Medical Center

• Altoona VA Clinic

• Erie VA Clinic

Pennsylvania Military Education Benefits (Tier 2: Strong Programs)

Pennsylvania offers exceptional education benefits for military service members, veterans, and their families. The state is home to excellent universities with Yellow Ribbon programs and one of the nation's best National Guard education benefits:

🎓 PA National Guard Education Assistance Program (EAP) - 100% Tuition at State Schools

One of the best Guard programs in the nation! The Pennsylvania National Guard Education Assistance Program provides 100% tuition coverage at any Pennsylvania state-owned or state-related school.

Benefit: 100% tuition at PA state schools (PASSHE, Pitt, Penn State, Temple, Lincoln)
Eligibility: Active PA National Guard members in good standing
No service commitment beyond Guard enlistment
Covers undergraduate and graduate programs
Can be combined with Federal TA (up to $4,500/year)

🎖️ Educational Gratuity Program - For Children of Deceased Veterans

Pennsylvania provides free tuition at state-owned schools for children of veterans who died in service or from service-connected disabilities.

Benefit: 100% tuition waiver at any PASSHE university
Eligibility: Child aged 16-23 of veteran who died on active duty or from service-connected disability rated 100%
Covers: All 14 PASSHE universities (Bloomsburg, Cheyney, East Stroudsburg, etc.)
No income limits or GPA requirements

👁️ Pennsylvania Blind Veterans Grant

Annual grant for legally blind veterans to help with education, training, or equipment costs.

Benefit: Up to $500 per year
Eligibility: Legally blind Pennsylvania resident veteran
Use for: Education, training, or assistive equipment
Apply through PA Department of Military and Veterans Affairs

🟡 Yellow Ribbon Program Schools in Pennsylvania

Pennsylvania is home to numerous top-tier universities participating in the Yellow Ribbon Program, helping cover tuition beyond the GI Bill's annual cap.

Major Universities

University of Pennsylvania (Ivy League)
Carnegie Mellon University
Villanova University
Drexel University
Temple University
University of Pittsburgh

Additional Schools

Penn State University
Lehigh University
Duquesne University
Saint Joseph's University
La Salle University
Plus many more private schools

Note: Yellow Ribbon amounts and eligibility vary by school and program. Check with each institution's veterans office.

🏫 PASSHE - PA State System of Higher Education (14 Universities)

Pennsylvania's state system includes 14 comprehensive universities with dedicated veteran services and affordable tuition.

PASSHE Universities

Bloomsburg University
California University of PA
Cheyney University
Clarion University
East Stroudsburg University
Edinboro University
Indiana University of PA

Kutztown University
Lock Haven University
Mansfield University
Millersville University
Shippensburg University
Slippery Rock University
West Chester University

All PASSHE schools offer veteran-friendly services, military credit transfer, and competitive in-state tuition rates.

📚 Pennsylvania Community College System (15 Colleges)

Pennsylvania's 15 community colleges provide affordable education with strong veteran support services.

Bucks County CC
Butler County CC
Community College of Allegheny County
Community College of Beaver County
Community College of Philadelphia

Delaware County CC
Harrisburg Area CC
Lackawanna College
Lehigh Carbon CC
Luzerne County CC

Montgomery County CC
Northampton County CC
Reading Area CC
Westmoreland County CC
Pennsylvania Highlands CC

Average tuition: ~$5,000/year for in-district students. Fully covered by GI Bill with housing allowance.

🏠 In-State Tuition for All Veterans

All honorably discharged veterans qualify for in-state tuition at Pennsylvania public colleges and universities, regardless of residency status.

Applies to: All Pennsylvania public institutions (PASSHE, Penn State, Pitt, Temple, community colleges)
Eligibility: Veterans using GI Bill benefits or who served on active duty for at least 90 days
Also covers: Spouses and dependents using transferred GI Bill benefits
No waiting period required

📋 How to Apply for PA Military Education Benefits

PA National Guard EAP:

Contact your PA National Guard Education Services Officer
Complete application through your unit
Apply early (funding is first-come, first-served)

Educational Gratuity Program & Other State Benefits:

Pennsylvania Department of Military and Veterans Affairs (DMVA)
Phone: 1-800-547-2838
Website: www.dmva.pa.gov
Local County Veterans Affairs offices can also assist

GI Bill & Yellow Ribbon:

Apply for GI Bill through VA.gov
Contact school's veterans office for Yellow Ribbon enrollment

Best Cities in Pennsylvania for Military Retirees (2026)

City	Nearby Base	Median Home Price	Why It's Great
Carlisle	Carlisle Barracks	$245,000	Military heritage, Army War College, charming downtown
Harrisburg	193rd SOW	$210,000	State capital, affordable, good job market
Pittsburgh suburbs	VA Medical Center	$185,000	Major metro, sports culture, affordable
Philadelphia suburbs	Philadelphia VA	$320,000	Major metro, history, excellent healthcare

Pros and Cons of Retiring in Pennsylvania

✅ Pros

• 100% exemption on military retirement (no limits)
• Social Security not taxed
• PA National Guard EAP: 100% tuition at state schools (best Guard benefit)
• Strong Yellow Ribbon participation at top universities
• Rich military history (Valley Forge, Gettysburg)
• Four distinct seasons
• Multiple military installations
• Excellent VA healthcare (4 major medical centers)
• Lower cost of living in rural areas
• Property tax exemptions for 100% disabled vets
• Strong veteran community

⚠️ Cons

• Cold winters with snow (heating costs)
• Local property taxes can be high
• 3.07% state tax on civilian income
• Philadelphia and Pittsburgh metros expensive
• Aging infrastructure in some areas
• Higher utilities (heating required)
• Humid summers
• Some rural areas lack amenities

Frequently Asked Questions

Does Pennsylvania tax military retirement pay?

No. Pennsylvania offers a 100% exemption on ALL military retirement pay with no age requirement and no income limit. This applies to all military pensions whether you retired from active duty, reserves, or National Guard. You'll only pay federal income tax, with zero Pennsylvania state tax on your military retirement.

What is Pennsylvania's state income tax rate in 2026?

Pennsylvania has a flat state income tax rate of 3.07% (2026). However, military retirement pay is 100% exempt from this tax. You'll only pay this rate on other taxable income like civilian wages or business income. Social Security benefits are also exempt from Pennsylvania state tax.

What property tax benefits do veterans get in Pennsylvania?

Pennsylvania offers property tax exemptions for 100% disabled veterans. The specific exemption amounts vary by county and municipality, but many counties offer significant reductions or full exemptions for totally disabled veterans. Some localities also offer additional exemptions for wartime veterans. Contact your county tax assessor for specific details.

What are the major military bases in Pennsylvania?

Pennsylvania's major military installations include Carlisle Barracks (home to the U.S. Army War College), Fort Indiantown Gap (Army National Guard training center), Naval Support Activity Mechanicsburg, 193rd Special Operations Wing (Air National Guard in Harrisburg), Tobyhanna Army Depot, and Letterkenny Army Depot.

Does Pennsylvania offer education benefits for National Guard?

Yes! Pennsylvania offers one of the best National Guard education benefits in the nation. The PA National Guard Education Assistance Program (EAP) provides 100% tuition coverage at any Pennsylvania state-owned or state-related school (PASSHE universities, Penn State, Pitt, Temple, Lincoln University). This is available to all active PA National Guard members in good standing and can be combined with Federal Tuition Assistance. It covers both undergraduate and graduate programs with no additional service commitment beyond your Guard enlistment.

What is the PA Educational Gratuity Program?

The Pennsylvania Educational Gratuity Program provides 100% tuition waivers at any PASSHE (Pennsylvania State System of Higher Education) university for children of veterans who died on active duty or from service-connected disabilities rated at 100%. Eligible children (ages 16-23) can attend any of Pennsylvania's 14 state universities completely free. There are no income limits or GPA requirements. Contact the Pennsylvania Department of Military and Veterans Affairs (DMVA) at 1-800-547-2838 to apply.

Calculate Your Pennsylvania Retirement Income

Use our free calculator to see exactly how much you'll keep after taxes when retiring in Pennsylvania. Factor in your military pension, VA disability, and any civilian income to plan your retirement with confidence.

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🦅 Bottom Line for Pennsylvania Military Retirement

Pennsylvania offers exceptional tax advantages for military retirees with 100% exemption on ALL military retirement pay (no age or income limits). Combined with rich military history, four distinct seasons, multiple military installations, excellent VA healthcare, and a moderate cost of living outside major metros, Pennsylvania is an outstanding retirement destination for servicemembers. Use our calculator above to see your exact financial picture in the Keystone State.