Updated October 4, 2026. Quick answer: No, with a subtraction. Line 26 of Form IT-201 subtracts a pension from “instrumentality of the United States (including the military)” to the extent it is in federal adjusted gross income, and no dollar cap is printed for it.
How New York treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Subtraction on Form IT-201 line 26 for a federal pension, including the military, to the extent in federal adjusted gross income |
| Cap or age | No dollar cap or age limit is printed for line 26 |
| Separate exclusion | The $20,000 pension and annuity exclusion on line 29 is for pension income not from a federal or New York government plan, and needs age 59 and a half |
A $30,000 example
A retiree with $30,000 of military retired pay in federal adjusted gross income subtracts it on line 26, so none of that pay is left to tax.
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What changes in 2026
No 2026 change is printed in the documents read.
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 New York taxes pensions, how New York taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- 2025 Instructions for Form IT-201: https://www.tax.ny.gov/pdf/current_forms/it/it201i.pdf
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.