Military Retirement in Texas: Complete 2026 Tax Guide
NO state income tax on retirement pay or VA disability
🎯 Quick Summary: Texas Military Retirement Taxes (2026)
- ✓ Military retirement pay: NO state income tax
- ✓ VA disability payments: Tax-free (federal and state)
- ✓ Survivor Benefit Plan (SBP): NO state income tax
- ✓ Property tax: Exemptions available for disabled veterans
- ✓ Overall ranking: #1 most tax-friendly state for military retirees
Why Texas Is One of the Best States for Military Retirement
Texas stands out as one of the most tax-friendly states in the nation for military retirees. As one of only nine states with no state income tax, Texas allows you to keep 100% of your military retirement pay and VA disability compensation (except for federal taxes).
Beyond the tax benefits, Texas offers a low cost of living (8% below national average in 2026), strong veteran community (1.5 million veterans statewide), excellent healthcare through VA Texas Valley Coastal Bend Health Care System and 7 major VA medical centers, and abundant job opportunities in energy, tech, and defense industries.
2026 Texas Military Retirement Tax Breakdown
State Income Tax on Military Retirement Pay
🎉 ZERO State Income Tax!
Texas does not have a state income tax. This applies to ALL income, including military retirement pay, pensions, wages, investment income, and business income. Your military pension is only subject to federal income tax.
VA Disability Compensation
✓ Completely Tax-Free
VA disability payments are tax-exempt at both the federal and Texas state levels. Whether you receive 10%, 100%, or any rating in between, you keep every dollar.
Other Tax Benefits for Texas Veterans (2026)
| Benefit | Details |
|---|---|
| Property Tax Exemption |
|
| Sales Tax | 6.25% state sales tax (local taxes may add 0-2%). No special veteran exemption, but applies to all residents equally. |
| Vehicle Registration | Disabled veterans with specially adapted vehicles may qualify for exemptions. Purple Heart recipients get specialty license plates. |
| State Park Access | Veterans with 60%+ disability get free Texas State Parks pass. |
Real Example: How Much You'll Save in Texas (2026)
Let's compare a military retiree in Texas vs. California to see the tax savings:
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
Texas (NO State Income Tax)
Taxable income: $33,600 (retirement pay only)
State tax: $0
California (9.3% Tax Bracket)
Partial exemption, but still pays on some income
State tax: ~$2,100
Annual Texas Savings: $2,100+
Over 20 years of retirement: $42,000+ saved
Cost of Living in Texas for Military Retirees (2026)
Texas offers a cost of living 8% below the national average, making your retirement dollars stretch further:
| Category | Texas vs. National Average | Notes |
|---|---|---|
| Housing | -10% cheaper | Median home price: $320,000 (2026). More affordable in San Antonio, Corpus Christi. |
| Groceries | -5% cheaper | H-E-B and Walmart provide competitive pricing. |
| Healthcare | Similar to average | 7 VA medical centers + TRICARE network widely accepted. |
| Transportation | -12% cheaper | Gas prices typically 10-15% below California. Car-dependent culture. |
| Utilities | Similar to average | Deregulated electricity market = competitive rates. A/C costs high in summer. |
Major Military Installations in Texas
Texas is home to 15 major military installations across all service branches, offering excellent transition opportunities and strong veteran communities:
🏰 Army
- Fort Cavazos (formerly Fort Hood) - Killeen - Largest active-duty armored post
- Fort Bliss - El Paso - Home of 1st Armored Division
- Fort Sam Houston - San Antonio - Medical training hub
✈️ Air Force
- Joint Base San Antonio - Lackland, Randolph - Training epicenter
- Dyess AFB - Abilene - B-1B Lancer home
- Sheppard AFB - Wichita Falls - Pilot training
⚓ Navy
- NAS Corpus Christi - Primary naval aviation training
- NAS Fort Worth JRB - Joint Reserve Base
🎖️ Other
- Red River Army Depot - Texarkana
- Camp Bullis - San Antonio
Best Cities in Texas for Military Retirees (2026)
| City | Nearby Base | Median Home Price | Why It's Great |
|---|---|---|---|
| San Antonio | JBSA (3 bases) | $295,000 | Largest military city, excellent VA healthcare, low cost of living, River Walk culture |
| Killeen | Fort Cavazos | $245,000 | Most affordable, tight-knit veteran community, central Texas location |
| El Paso | Fort Bliss | $265,000 | Low cost, great weather, bilingual culture, outdoor recreation |
| Corpus Christi | NAS Corpus | $280,000 | Beach town, Navy heritage, fishing/boating, warm climate |
| Austin | Camp Mabry | $575,000 | Tech jobs, live music capital, great food scene (higher cost) |
VA Healthcare & Resources in Texas
Texas has 7 major VA medical centers and over 50 outpatient clinics serving 1.5 million veterans:
- North Texas VA Health Care System (Dallas) - Largest in the state, full services
- South Texas Veterans Health Care System (San Antonio) - Affiliated with UT Health
- Michael E. DeBakey VA Medical Center (Houston) - Research hospital, nationally ranked
- Central Texas Veterans Health Care System (Temple) - Serves Fort Cavazos area
- West Texas VA Health Care System (El Paso/Big Spring)
- VA Texas Valley Coastal Bend Health Care System (Harlingen/Corpus Christi)
- Amarillo VA Health Care System
🎓 Education Benefits for Veterans & Families in Texas
Texas offers some of the best education benefits in the nation for veterans and their families. The Hazlewood Act alone can save military families $50,000 or more in college tuition costs.
Texas Hazlewood Act: Free College for Veterans
Up to 150 Credit Hours FREE at Texas Public Institutions
The Hazlewood Act provides qualified veterans with an exemption from tuition and most fees at Texas public colleges and universities. This benefit can be worth $40,000-$80,000+ depending on the institution.
Who Qualifies for Hazlewood Benefits?
| Requirement | Details |
|---|---|
| Residency | Texas resident at time of entry into service, OR designated Texas as Home of Record, OR entered service in Texas |
| Service | Served at least 181 days of active duty (excludes training) |
| Discharge | Honorable discharge or general discharge under honorable conditions |
| GI Bill Status | Must have exhausted federal GI Bill benefits OR be ineligible for them |
| Credit Limit | Up to 150 credit hours (undergraduate and graduate combined) |
Hazlewood Legacy Act: Transfer Benefits to Dependents
Veterans can transfer their unused Hazlewood hours to their children or spouse through the Legacy Act. This is one of the most valuable dependent education benefits in any state.
Legacy Act Eligibility for Dependents:
- Child must be under 25 years old (or under 26 if used before turning 25)
- Spouse has no age restriction
- Dependent must be a Texas resident
- Veteran must have unused Hazlewood hours to transfer
- Can be used at any Texas public college or university
Hazlewood Value at Top Texas Universities (2026)
| University | Annual Tuition (Resident) | 4-Year Value |
|---|---|---|
| University of Texas - Austin | ~$11,500 | $46,000+ |
| Texas A&M University | ~$12,000 | $48,000+ |
| University of Houston | ~$10,500 | $42,000+ |
| Texas Tech University | ~$9,500 | $38,000+ |
| UT San Antonio | ~$8,500 | $34,000+ |
Yellow Ribbon Program Schools in Texas
For veterans using the Post-9/11 GI Bill at private universities, the Yellow Ribbon Program can cover tuition costs above the GI Bill cap. Texas has many participating schools:
Top Yellow Ribbon Schools
- Rice University - Unlimited funding
- Southern Methodist University - Full tuition
- Baylor University - Up to $25,000/year
- Texas Christian University - Significant awards
- Trinity University - Full tuition coverage
How Yellow Ribbon Works
- School contributes a portion
- VA matches the school's contribution
- Combined with GI Bill = free tuition
- Must have 100% Post-9/11 GI Bill
- Contact school's VA office to apply
Texas National Guard Education Benefits
Texas National Guard members have access to additional state-funded education assistance:
Texas National Guard Tuition Assistance (State TA)
- Up to $10,000 per semester for eligible Guard members
- Can be used alongside federal Tuition Assistance
- Covers tuition at Texas public and private institutions
- Must maintain satisfactory academic progress
- Contact your unit's Education Services Officer for details
How to Apply for Texas Education Benefits
- Hazlewood Act: Apply through your school's VA certifying official. Submit DD-214, Texas residency proof, and Hazlewood application.
- Legacy Act Transfer: Complete the Texas Veterans Commission Legacy Act application and submit to your school.
- Yellow Ribbon: Contact the school's VA office directly - each school has its own application process.
- Questions? Call the Texas Veterans Commission Education Line: 1-877-898-3833
Official Resources: Texas Veterans Commission Education | VA Yellow Ribbon Search
Pros and Cons of Retiring in Texas
✅ Pros
- • NO state income tax (saves $1,000-$5,000+/year)
- • Low cost of living (8% below national average)
- • Hazlewood Act: 150 hrs FREE tuition ($40K-$80K value)
- • Legacy Act transfers education benefits to dependents
- • Strong veteran community (1.5M vets)
- • Excellent VA healthcare system (7 medical centers)
- • Property tax exemptions for disabled vets
- • No estate or inheritance tax
- • Job opportunities (energy, tech, defense)
- • 15 major military installations
⚠️ Cons
- • Property taxes can be high (fund schools/services)
- • Hot summers (100°F+ in July/August)
- • High humidity in Houston/Corpus Christi
- • Car-dependent (limited public transit)
- • Hurricane risk (coastal areas)
- • Political climate may not suit everyone
- • Healthcare costs rising (though VA available)
Frequently Asked Questions
Does Texas tax military retirement pay?
No. Texas has no state income tax, so military retirement pay is completely tax-free at the state level. You only pay federal income tax on your military pension.
Does Texas tax VA disability payments?
No. VA disability compensation is tax-free at both the federal and state levels nationwide, including Texas.
What is the cost of living in Texas for military retirees?
Texas has a cost of living approximately 8% below the national average in 2026. Housing costs are particularly affordable compared to states like California or New York, making Texas an attractive retirement destination for veterans.
What major military bases are in Texas?
Texas has 15 major military installations including Fort Cavazos (formerly Fort Hood), Fort Bliss, Joint Base San Antonio (Lackland, Randolph, Fort Sam Houston), Naval Air Station Corpus Christi, and Dyess Air Force Base.
Do veterans get property tax exemptions in Texas?
Yes. Texas offers property tax exemptions ranging from $5,000 to $12,000 based on disability rating. Veterans with 100% disability or age 65+ receive a full exemption on their primary residence.
Is Texas a good state for military retirees?
Yes. Texas ranks among the top states for military retirees due to zero state income tax, low cost of living, strong veteran community, excellent VA healthcare, and abundant job opportunities. The combination of financial benefits and quality of life makes Texas highly attractive for veterans.
Does Texas offer free college tuition for veterans?
Yes. The Texas Hazlewood Act provides up to 150 credit hours of free tuition at Texas public colleges and universities for eligible veterans. This benefit can be worth $40,000-$80,000+ depending on the institution. Veterans must have served at least 181 days of active duty and have an honorable discharge.
Can military dependents get free college in Texas?
Yes. Through the Hazlewood Legacy Act, veterans can transfer their unused Hazlewood hours to their children (under age 25) or spouse. This makes Texas one of the best states for military families seeking education benefits. The dependent must be a Texas resident to qualify.
Calculate Your Texas Retirement Income
Use our free calculator to see exactly how much you'll keep after taxes when retiring in Texas. Factor in your military pension, VA disability, and any civilian income to plan your retirement with confidence.
Ready to Calculate Your Texas Retirement Income?
See exactly what civilian salary you need based on your retirement pay, VA disability, and Texas's zero state income tax
Use the Free Calculator →Additional Resources for Texas Veterans
- Texas Veterans Commission - tvc.texas.gov - State benefits, employment assistance
- Texas Workforce Commission Veterans Services - Job placement, training programs
- Veterans Land Board - Low-interest land, home, and home improvement loans
- Hazlewood Act Information - TVC Education Page - 150 credit hours FREE tuition for veterans
- Hazlewood Legacy Act - Transfer benefits to dependents
- VA Yellow Ribbon Schools in Texas - Search participating schools
- Texas Parks & Wildlife - Free state park access for disabled veterans
- Military Retirees Active in San Antonio (MRASA) - Social organization for military retirees
🎖️ Bottom Line for Texas Military Retirement
Texas offers unbeatable tax and education advantages for military retirees with zero state income tax, saving you thousands annually. The Hazlewood Act provides up to 150 credit hours of free college tuition (worth $40K-$80K+), and veterans can transfer unused hours to dependents through the Legacy Act. Combined with a low cost of living, strong veteran community, and excellent VA healthcare, Texas is one of the top retirement destinations for servicemembers and their families. Use our calculator above to see your exact financial picture in the Lone Star State.
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