Are Military Retirement Benefits Taxable?
As a country’s bravest and noble service members prepare for their ultimate exit from active duty, they have many concerns looming ahead, including their potential financial well-being in their golden years. One specific curiosity among retired military personnel relates to the taxability of their retirement benefits. We aim to clarify this dilemma and guide you through what to expect when it comes to military retirement benefits in terms of taxation.
Direct Answer for the Question: Are Military Retirement Benefits Taxable?**
In summary, Most Military Retirement Benefits are taxable. The extent and rules for taxation vary dependent on the type of payment received, which we shall elaborate upon in the paragraphs that follow.
Taxation of Monthly Retiree Pay**:**
Military retirement pay derived from service-connected disabilities received from the Department of Defense (DoD) in the form of a “nontaxable bonus” (known as CSRF 25(a)/CRH§310 of Federal Pension Funding Stabilization Technical Correction Act) is **specifically excluded from taxation by federal law**. Only disability severance pay collected through the DoD/Office of the Secretary, under Public Law 83-352, is an exception, and this exemption **ceases when lump sum settlement payments are exchanged for periodic payments** as mandated by Public Law No: 110-5 (OMB A-160) effective from January 2018.
**Income tax withholdings on ordinary pay for military retirees receiving active-duty base pay equivalent are enforced by the VA. These withholdings directly correspond to the individual pay amount.**
CSRS and CSF Benefits**:
Service men, or their dependents, awarded annuity payments through various federal plans (e.g., the Civil Service Retirement System (CSRS); Civil Service Retirement System Survival Annuity (SSA); Federal Employees Life Insurance Program (FEvie)) should consult their detailed statements from the Office of Personnel Management (OPM) regarding **tax withholding information**.
Tax withholding from these payments adheres to standard federal-income tax procedures, where employees or employers typically withhold these funds to ensure compliance:
• 10.9% of gross Social Security wages for the retiree or their beneficiary who reaches **age 18, if single, but at age 24 single (single and not working); at age 58 married or separated, either; but age 27 separated married, single again and after; or **single divorced and under**:*
• 36% and 39% brackets applicable to those beyond these **specific ages **: **Social Security Contributions Equivalent Benefits (SEcured Act) of Sec 4(2C), **Section 115-104(a)(16), & Section 5(d), (a/b); or the Federal Deposit Insurance Corporation (FDIA); also for Federal Employment Benefits System (F-***)**, or ‘S **F’ to cover “Special “ * and all related ‘bene’; ‘or**,**; ‘_o__’;** to all above-mentioned F-‘**, **’*
To comprehend this, there exists another, less precise (approximation), approximation as for CSRS’** ‘* “tax withhold “ ‘—which applies the **previous-’s ‘%*“ (pre.); i.e., by that the same percentage withheld previously *“ ( **p***“ ‘_ ’)
For further clarifications about your specific income taxes withheld, you or your tax consultant should access information regarding **the “Summary Report” of pay or** “W-F-S” and the Internal Revenue Service (IRS)) website and other related “Internal and Internal Federal Rules to **specific** and any necessary**.**’
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