Oklahoma Military Retirement Income Tax Exemption

Title 68, section 2358, subsection E, paragraph 18: "For tax year 2022 and subsequent tax years, retirement benefits received by an individual from any component of the Armed Forces of the United States shall be exempt from taxable income." There is no age test, no cap and no residency period. It covers retired pay for active duty and for Guard and reserve service. What it replaced. For tax years 2006 through 2021 the exemption was the greater of 75 percent of the benefits or $10,000. The Oklahoma Department of Veterans Affairs benefits page still gives that as the rule: "Retirement benefits received by an individual from any component of the Armed Forces of the U.S. shall be exempt from taxable income in an amount not to exceed the greater of 75% of such benefits or $10,000." That has been out of date for five tax years. Rely on the statute and the current Form 511 instructions. Survivor annuities. The paragraph speaks of retirement benefits "received by an individual from any component of the Armed Forces". The Army benefits library says Survivor Benefit Plan annuities are exempt; the statute's words do not name them, so a surviving spouse should confirm with the Tax Commission how they are being treated in the current instructions. What is never taxed. VA disability compensation, dependency and indemnity compensation and combat-related disability pay are not in federal adjusted gross income, so Oklahoma never reaches them. Three versions, one rule. The 2025 edition prints section 2358 in three versions, from three 2024 acts. All three carry the same paragraph 18. Senate Bill 2184 of 2026 merged them, and House Bill 4432 of 2026, enacted over the Governor's veto, amends the section from 2027 for gambling losses without touching the military paragraphs.