Is military retirement pay taxed in Oregon?
By a Navy veteran. Updated October 2026.
Yes
Oregon: Taxed as ordinary income. Only service before October 1, 1991 qualifies for a deduction. Federal income tax still applies to retired pay in every state.
What this means for your plan
Oregon taxes military retired pay like other income, so plan for state tax on top of federal tax. Rates and brackets change, so confirm the current rate before you build your budget.
VA disability pay is not taxed by the federal government, and most states follow that treatment.
Local taxes in Oregon
The Portland area has extra income-based taxes that follow state taxable income. Confirm with your county.
Questions
Does Oregon tax military retirement pay?
Yes. Taxed as ordinary income. Only service before October 1, 1991 qualifies for a deduction.
Is VA disability pay taxed in Oregon?
VA disability compensation is not taxed by the federal government, and most states follow that treatment. Confirm with the Oregon Department of Revenue.
Where do I confirm the rules for Oregon?
Use the Oregon Department of Revenue and the DFAS retired pay tax page. Rules change, so check the current year before you decide where to live.
See it for your family
The free planner puts your retired pay, VA pay and Oregon tax on one 24-month timeline, so you can see the month money gets tight. The States tab in the full version compares all 50 states and DC side by side.
Open the plannerSource and method
This summary comes from the state treatment data in the Runway planner, compiled from published state guides. It is not an official ruling. For the official rule, see the Oregon Department of Revenue and the DFAS retired pay tax page.