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Level 1

Question

military retirement in idaho

Forum|Forum|5 years ago
March 10, 2021
3 replies
18 views

I'm doing my Idaho state taxes. My military retired pay is not taxable but it doesn't ask me about it. Am I putting something in incorrectly?

DMarkM1

Level 15

You are correct ID does have a deduction for part of military retirement benefits up to $36,132 ($54,198 if married filing jointly) if you meet one of the below criteria.

- You must be age 65 or older, OR
- You must be disabled and age 62 or older, OR
- You must be the single surviving spouse of a qualifying retiree who meets the above age limitations.

If you meet the criteria be sure you have indicated in the "My Info" section that you are "former" military (retired).

Then revisit the ID state interview
Continue through and you will arrive at a page titled "Retirement Annuity"
You should click "Yes" for "Military Retirement".
The next box is where you put in the amount of military retirement distribution.
The next box click "Qualified" from the dropdown menu.

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srogan

Level 2

Everything I read online says Idaho exempts military pension but the tax program only "reduces" the liability. which is it?

VolvoGirl

Level 15

That sounds like the same thing. If the pension is deducted from your income then the tax liability will go down.

oncorhynchus

Level 2

This issue needs to be revisited by Turbotax expeditously!

As of the date this message, their 2025 Desktop software does NOT implement the changes made to Idaho's tax law (ID Code § 63-3022A (2025)) in early 2025 broadening the criteria for military retirement pay that is eligible for deduction:

See: Idaho Code Section 63-3022A (2025) - DEDUCTION OF CERTAIN RETIREMENT BENEFITS. (https://law.justia.com/codes/idaho/title-63/chapter-30/section-63-3022a/)

also: Idaho Retirement Benefits Deduction | Idaho State Tax Commission (https://tax.idaho.gov/taxes/income-tax/individual-income/popular-credits-and-deductions/idaho-retirement-benefits-deduction/)

also: 2025 Idaho State Income Tax Forms and Instructions (https://tax.idaho.gov/wp-content/uploads/forms/EIN00046/EIN00046_09-29-2025.pdf)

I wish I hadn't paid Intuit extra for a state return this year; thanks to their failure to keep up I now have to fill out and file my Idaho state return manually this year.

JamesG1

Level 15

In TurboTax Desktop Premier, I am able to prepare an income tax return for a retiree, 65 years or older, with a Military pension.

On the Idaho state income tax return, I am able to report both the Social Security and the Military pension for a retiree, 65 years or older as not taxed by Idaho.

In the Idaho state income tax return, at the screen Retirement Annuity, I selected Yes. I then entered the amount of eligible retirement benefits.

Learn more states:

Retired Service Members: Military retirement benefits qualify if:

You're classified as disabled, OR
You're age 62 or older, OR
You're under age 62, worked during the year, and earned enough to file a federal return.

To claim this deduction, you need to meet both the age/disability rules in Part One and receive qualifying retirement benefits from Part Two.

2025 Idaho Code
Title 63 - REVENUE AND TAXATION
Chapter 30 - INCOME TAX
Section 63-3022A - DEDUCTION OF CERTAIN RETIREMENT BENEFITS.

(b) Retirement benefits paid by the United States of America to a retired member of the military services of the United States, or the unremarried widow or widower of such member, who:

(i) Is classified as disabled, as defined in subsection (4) of this section;
(ii) Has attained the age of sixty-two (62) years by the end of the tax year; or
(iii) Was employed during the tax year and received sufficient income from such employment to be required to file a federal return under section 6012(a)(1) of the Internal Revenue Code.

@oncorhynchus

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oncorhynchus

Level 2

Thank you for responding. I appreciate your willingness to look at this.

I am using 2025 Tubotax Deluxe Desktop last updated 11 Feb 2026. I am a military retiree receiving retirement pay, younger than age 60, both disabled and with enough income requiring me to file a federal income tax return.

I specifically linked the Idaho code because subsection (a) is what specifies the older 2-part qualification test.

Subsection (b), specific to military retirement plans, is a separate way of qualifying for the retirement plan deduction, not part of the 2-part test in subsection (a). I also linked to the Idaho Tax Commission site it also makes the distinction clear.

1. Regarding the "Learn More" text:

Putting the yellow highlighted statement after the pink one makes it seem like the pink qualifications are part of the 2-part test. As I don't meet the 2-part test criteria, I may conclude from the "Learn More" guidance that my military retirement benefits are not eligible.

2. Regarding my interview (in order):

And this is the 39R form that was generated:

The interview appears to be using the subsection (a) "Part One" criteria and not giving me an opportunity to indicate I meet the subsectioon (b) "Retired Service Member" criteria.

3. After some trial and error, I have found what appears to be a workaround on Form 39R by just checking Box A in Reitirement Benefits Deduction Smart Worksheet, allowing me to fill in line 8a, leading to an approprite line 8f:

This workaround appears to be durable all the way to a .pdf printout of the final form, but I'm a little leary as there may be unintended consequences.

Respectfully,

@JamesG1

srogan

Level 2

I just filed my Idaho taxes on turbo tax yesterday. do I need to file an amended return. It asked me about the the qualified retirement and I said yes.

DaveF1006

Level 15

You must meet one of the following criteria by the last day of the tax year to claim military retirement.

Age 65 or older.
Age 62 or older AND disabled.
Under age 62 and disabled: If you are a veteran of a "wartime period" and have a service-connected disability of 10% or more, or if you receive a non-service-connected disability pension from the VA.

You may qualify under the third bullet point if you meet that qualification. If you qualify, be sure you have documentation supporting your service-connected disability.

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oncorhynchus

Level 2

Denouement

I contacted the Idaho State Tax Commission regarding the issue I detailed above; they responded that my military retirement qualified (subject to statutory limits) for the benefit deduction in accordance with §63‑3022A(1)(b)(iii).

I am done with this topic: I have an actionable answer from the Tax Commission, and both Intuit and the Idaho State Tax Commission have been made aware of the issue in the Idaho state edition of the Turbotax software, to be addressed however they see fit. I plan to use the workaround I described above to file.

NB: the issue persists as of update released 4 Mar 2026.

Best of luck,