If you’re a Veteran living in DC, Maryland, Virginia, Florida, Delaware, North Carolina, or South Carolina, you may be eligible for powerful state tax benefits that can help you keep more of your retirement income and reduce your property taxes. These savings can make a real difference—especially for Veterans looking to buy a home or stretch their retirement dollars.
As a mortgage lender who works closely with Veterans and military families, we’re breaking down the most valuable income and property tax benefits for Veterans by state—and explaining how they can help you save.
Why Do Veteran Tax Benefits Matter?
Tax savings may not always be top of mind, but for Veterans, they can lead to:
Lower income tax bills on military retirement pay
Reduced property taxes that make homeownership more affordable
More room in your monthly budget to invest, save, or spend on what matters most
Let’s look at how each state supports its Veterans through tax relief:
Washington, D.C. Veteran Tax Benefits
Tax on Military Retirement and Disability Pay
Military retirement pay is taxable, but disability retirement pay due to service-connected injuries is exempt.
Social Security benefits are not taxed in DC.
Property Tax Relief for Disabled Veterans
Veterans with a 100% service-connected disability (or rated as unemployable) can receive a $445,000 reduction in their home’s taxable value.
Subject to income limits ($159,750 for 2025) and primary residency requirements.
Maryland Veteran Tax Benefits
Military Retirement Income Deduction
Deduct up to $12,500 of retirement income (or $20,000 if 55+).
Veterans who are 65+, totally disabled, or have a disabled spouse may deduct up to $34,300.
Property Tax Exemption for Disabled Veterans
Veterans with a 100% permanent service-connected disability may receive a full exemption on real property taxes.
Surviving spouses of service members killed in action may also qualify.
Local property tax rules vary, so check with your loan officer for details about your county.
Virginia Veteran Tax Benefits
Military Retirement Pay Deduction
Veterans can deduct up to $30,000 in 2024, increasing to $40,000 in 2025 and beyond, from their taxable income.
Property Tax Relief for Veterans and Surviving Spouses
Veterans with a 100% service-connected disability are exempt from property taxes on their primary residence.
Surviving spouses of disabled Veterans or those killed in action may also receive full exemptions.
Florida Veteran Tax Benefits
No State Income Tax for Veterans
Florida is one of the most Veteran-friendly states with no state income tax.
All forms of retirement pay and VA benefits are tax-free at the state level.
Veteran Property Tax Exemptions
Veterans with 10% or more disability deduct $5,000 from their home’s assessed value.
Those with 100% permanent disability or qualifying injuries may receive a full property tax exemption.
Surviving spouses may also qualify if they meet eligibility criteria.
North Carolina Veteran Tax Benefits
Military Retirement Income Tax Exemption
Military retirement pay and Survivor Benefit Plan payments are 100% tax-free in North Carolina.
Property Tax Breaks for Veterans
$45,000 of your home’s value is exempt from property taxes if you have a 100% permanent, service-connected disability or receive Dependency and Indemnity Compensation.
Qualifying Veterans can also claim a $2,000 annual mortgage tax credit, which can be combined with down payment assistance.
South Carolina Veteran Tax Benefits
Exemptions for Military Retirement and VA Benefits
South Carolina does not tax military retirement, VA pensions, combat pay, or Reserve/Guard inactive duty pay.
Property Tax Exemptions for Veterans and Surviving Spouses
Totally disabled Veterans are exempt from all property taxes on their home and up to 5 acres.
Retroactive to 2022, this benefit can mean significant back savings.
Veterans with specific injuries (such as mobility or brain trauma) may qualify for additional full exemptions.
Delaware Veteran Tax Benefits
Military Retirement Income Tax Deduction
Deduct up to $12,500 of military retirement pay from your state income taxes until age 60.
After 60, you switch to Delaware’s general pension exclusion.
Property Tax Credit for Veterans
Qualified Veterans receive a full property tax credit for school district taxes on their primary residence. This helps reduce your annual property tax bill significantly.
Maximize Your Savings with These Veteran Tax Benefits
Understanding and applying for Veteran income and property tax benefits can lead to real savings—on both your state tax returns and your annual housing costs. These benefits honor your service and help make homeownership more accessible, especially in retirement.
At First Savings Mortgage, we’re here to support your financial journey every step of the way. Whether you’re buying your first home or refinancing, we’ll help you leverage every benefit you’ve earned—from VA loans to local tax exemptions.
Have questions about how these tax benefits impact your mortgage?
Contact one of our VA loan experts today—we’re here to help you make the most of your benefits.
