If you are in the military and thinking of retirement, consider the best retirement states now. A time will come when you may need to pay taxes on your military pension or Social Security. And where you are will determine how much money you will enjoy. If you have no idea where to start, you can do so with Oklahoma, one of the most affordable states for retirees. The retirement taxes there are pretty reasonable and worth considering further.
Among the issues to consider is whether Oklahoma taxes:
- Individual income
- Social Security
- Retirement distributions and pensions
It is also worth considering any additional veteran benefits that Oklahoma offers those who have served their country as well as their loved ones.
Does Oklahoma Have State Income Taxes?
The state of Oklahoma taxes individual income. The state’s income tax rate ranges depending on how much someone earns. The minimum rate is 0.5 percent, and the maximum is 5 percent. The good news is that tax only happens at the state level, so you will not have to pay additional taxes at city levels.
The individual income tax is a critical issue because military retirement payments are traditionally subject to federal income taxes. So, states that tax income add to your tax burden. However, active-duty military service people do not have to pay any taxes at all. It is completely exempt from state income taxes.
Read More: What Are Piggyback Taxes?
Does Oklahoma Have Property Taxes?
Property taxes in Oklahoma are among the lowest in the country. If you choose to reside in the state and invest in properties, what you pay will depend on your local taxes. And tax amounts depend on the value of your tangible property, which cannot increase by more than 3 percent per year provided there is no sale.
It is also worth noting that intangible properties, such as intellectual property, patents and trademarks, are exempt from taxation. So, you can enjoy earnings from such properties without incurring additional tax burdens.
Does Oklahoma Tax Social Security?
Oklahoma does not tax Social Security. Members of the military could get Social Security benefits if they participate in the program.
Also, if you retire early and work in a civilian capacity, you could pay FICA taxes and qualify for these benefits after at least 10 years of work. In addition, you could get Social Security Disability benefits if you become disabled while serving. So, it helps to learn whether you will pay taxes.
Read More: Do You Pay Taxes on Social Security?
Does Oklahoma Tax Pensions and Retirement Distributions?
Oklahoma permits exemptions of up to $10,000 per individual or $20,000 per couple for retirement incomes of all kinds, except for Social Security which is fully exempt. The Oklahoma retirement taxes will take effect after the threshold has been reached. However, military veterans can deduct $10,000 per individual or 75 percent from the taxable income, whichever is greater.
Does Oklahoma Tax Inheritances?
You don’t have to worry about paying an inheritance of estate tax in Oklahoma if you anticipate inheriting a property or leaving a legacy for your loved ones. However, if you inherit property from someone who lived in a state that charges inheritance taxes, you could still pay it. So, that’s worth thinking about.
Additional Benefits for Military Veterans
If you are a military veteran residing in Oklahoma, you may receive extra benefits, unavailable to those who have never served.
For starters, all disabled veterans are 100 percent exempt from property taxes. And should anything happen to you, your surviving spouse may also enjoy this tax exemption. The same kind of exemption also applies to motor vehicle taxes.
Disabled veterans also do not need to pay sales taxes within the state. Also, depending on the level of disability, military veterans can get hunting and fishing licenses at discounted rates for a lifetime.
In addition, any honorably discharged veteran can access state-owned and operated museums and parks at no cost.
Another benefit worth considering is the tuition waiver for military veterans or qualified dependents who want to pursue technology and technical education programs.
Oklahoma is one of the best retirement states for military veterans looking to enjoy life after service due to its affordability. And while it may not fully exempt military retirement income from taxation, it offers enough incentives for retirees to make it worth considering as a place to grow old. So, learn about what is available for you and decide if Oklahoma is where you want to settle in.
- OK Policy.Org: Individual Income Tax
- My Army Benefits: Federal Taxes on Veterans' Disability or Military Retirement Pensions
- My Army Benefits: Oklahoma Military and Veterans Benefits
- OK Policy.Org: Property Tax
- SSA.Gov: 2021Military Service and Social Security
- AARP: Can I collect both Social Security disability benefits and VA disability compensation?
- OK Policy.Org: Oklahoma’s spending on senior tax breaks is costly and poorly targeted
- Military: Oklahoma State Veteran Benefits
I have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.