Does Wyoming Tax Military Retirement?

Wyoming attracts retirees, especially military personnel, with its appealing financial environment. Its natural beauty and slower pace of life also appeal to those seeking a peaceful post-career chapter. Understanding the tax implications of relocating is a primary concern for many, shaping their decisions about where to establish their retirement home.

Wyoming’s State Income Tax Landscape

Wyoming does not have an individual income tax, meaning residents are not subject to state-level taxation on wages, salaries, or other personal income. The state generates revenue through other tax categories, rather than directly taxing citizens’ earnings. This policy influences the treatment of various income streams, including retirement benefits.

Taxation of Military Retirement Income

Because Wyoming lacks a state individual income tax, military retirement pay is not subject to state income tax within its borders. This offers a financial advantage to military retirees residing in Wyoming, allowing them to retain more of their earnings. Federal income tax obligations still apply to this income, as they do across all states. This distinction focuses solely on state-level tax treatment.

Other Retirement Income Considerations

Wyoming’s state income tax exemption extends to other common sources of retirement income. Social Security benefits are not taxed at the state level. Income from private pensions, 401(k) plans, and Individual Retirement Accounts (IRAs) is also exempt. Investment earnings, such as interest, dividends, and capital gains, likewise escape state-level taxation, enhancing Wyoming’s appeal for retirees.

Other Taxes in Wyoming

While Wyoming does not levy an income tax, residents are still subject to other forms of state and local taxation. Property taxes represent a significant component of the overall tax burden for homeowners. Residential property is assessed at 9.5% of its fair market value, with tax rates determined by local mill levies that vary by county and taxing entities. The statewide average effective property tax rate on owner-occupied housing is approximately 0.55% to 0.58%, placing Wyoming among states with lower property tax burdens.

Sales tax is another primary source of revenue. The state imposes a 4.00% sales tax on goods and services. Local jurisdictions, such as counties, can add their own sales taxes, typically an optional 1% general purpose tax, resulting in a combined state and local sales tax rate ranging from 4% to 6%. The average combined state and local sales tax rate is around 5.44%. These taxes apply to most retail purchases, though certain items like prescription drugs and some groceries may be exempt.