Updated October 4, 2026. Quick answer: Partly, through a credit instead of an exclusion. Utah Code 59-10-1043 gives a “nonrefundable tax credit against taxes equal to the product of” the state tax rate and the military retirement pay included in federal adjusted gross income, with no dollar cap or age in the section.
How Utah treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Nonrefundable credit equal to the state tax rate times military retirement pay included in federal adjusted gross income |
| Not counted | Social Security income, 401(k) or IRA distributions, and income from other sources are not military retirement pay |
| Survivor benefits | The retired pay portion of survivor benefits counts |
| Limits | No carryforward or carryback of excess credit; the credit cannot be claimed if the credit under Section 59-10-1019 is claimed on the same return |
| Rate | 4.45% effective January 1, 2026; the rate for 2025 is not printed in the documents read |
A $30,000 example
At the 4.45% rate that takes effect January 1, 2026, a retiree with $30,000 of military retired pay in federal adjusted gross income the credit is computed as $30,000 x 4.45% = $1,335.
Because the credit is nonrefundable, it reduces Utah tax owed but does not produce a refund.
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What changes in 2026
Utah Code 59-10-104, as amended by Chapter 250 of the 2026 General Session, prints a rate of 4.45% effective January 1, 2026.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.
Related: whether Utah taxes pensions, how Utah taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- Utah Code 59-10-1043 Nonrefundable tax credit for military retirement: https://le.utah.gov/xcode/Title59/Chapter10/C59-10-S1043_2022032320220323.html
- Utah Code 59-10-104 Tax basis: Tax rate: Exemption: https://le.utah.gov/xcode/Title59/Chapter10/C59-10-S104_2026050620260506.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.