Tennessee has no state income tax on wages and does not tax military retirement pay. That tax treatment is one reason some Fort Campbell retirees choose to settle on the Tennessee side of the state line. Kentucky generally taxes retirement income, though qualifying military retirees may be eligible for exclusions; check current rules and your own circumstances before deciding.
If you are deciding between Clarksville, Dover, or Stewart County in Tennessee and Christian County, Kentucky, compare the whole household budget, not just income taxes. Here’s what to know as you plan your next move.
Does Tennessee tax military retirement pay?
No. Tennessee does not tax military retirement pay, and it does not impose a state individual income tax on wages. The state’s former Hall income tax on interest and dividends was fully repealed effective January 1, 2021.
Tax rules can change, so confirm current information with the Tennessee Department of Revenue. This is general information, not tax advice. Your tax outcome can depend on your residency, income sources, and individual circumstances.
How does Kentucky treat military retirement income?
Kentucky generally taxes retirement income, but the treatment of military retirement pay can depend on your retirement date and service history. Some qualifying retirees may be able to exclude all or part of their military retirement income. Don’t assume every military pension is treated the same way, or that a general rule applies to your return.
For current guidance, review the Kentucky Department of Revenue information and consult a qualified tax professional about your specific situation. Checking this before you choose a state of residence can help you compare your likely take-home income more accurately.
Is VA disability compensation taxable?
Federal VA disability compensation is not taxable by any state. If you receive disability compensation, visit VA.gov for official information. Military retired pay and VA disability compensation are different types of benefits, and the details of an individual’s situation can matter. Ask a qualified tax professional if you have questions about how your benefits should be reported.
Should you choose Tennessee or Kentucky after Fort Campbell?
Start by comparing the specific communities and properties you are considering. Clarksville offers a range of neighborhoods and convenient access to local services. Dover and Stewart County may suit you if you prefer a quieter setting or a different pace of life. Across the state line, Christian County, including Hopkinsville, may offer another mix of housing choices, services, and daily travel patterns.
Consider your expected income, housing costs, commute, health care access, family connections, and plans for your home. Tennessee’s lack of individual income tax is a meaningful factor, but it is not the only cost to weigh. Property tax and sales tax are among the tradeoffs to include in your Tennessee budget. Compare actual property tax estimates and your typical taxable spending for the places you have in mind.
For a closer look at the location decision, read Haus’s guide to retiring in Clarksville or Kentucky after Fort Campbell and its Clarksville and Hopkinsville cost-of-living comparison.
How should mortgage rates factor into your retirement budget?
Freddie Mac’s Primary Mortgage Market Survey, released October 8, 2026, reported national averages of 7.40% for a 30-year fixed mortgage and 6.73% for a 15-year fixed mortgage. These averages are a benchmark, not a personalized quote; your rate and loan terms may differ. See the current survey at Freddie Mac PMMS.
For a simple illustration, a $100,000, 30-year fixed loan at 7.40% would have principal and interest of about $690 per month. At a rate a quarter-point lower-7.15%: the payment would be about $676 per month, a difference of roughly $14 monthly. These estimates do not include taxes, insurance, fees, or other costs, and they are not a loan offer.
If you buy without a mortgage, you would not have a principal-and-interest payment, but property taxes, insurance, maintenance, and other homeownership costs would still apply. Compare the full cost of ownership whether you plan to finance a purchase or pay cash.
What should Fort Campbell retirees review before moving?
Before choosing a home, list your regular income sources and confirm how each is treated under the rules for the state where you expect to live. Then compare realistic housing costs, including property taxes, insurance, utilities, upkeep, and any financing. Think about where you want to spend your time, how often you expect to travel to Fort Campbell or local services, and whether you want to buy right away or rent while you explore the area.
Haus also covers practical retirement updates in its article on the September 2026 DFAS retiree newsletter. Review that information alongside your own DFAS records and official guidance.
What does Randy Whetsell recommend?
Randy Whetsell, Broker/Owner of Haus Realty & Management in Clarksville, Tennessee, recommends looking at the move as a full lifestyle and budget decision:
“Tennessee’s tax treatment can be a strong reason to consider staying on this side of Fort Campbell, but your best fit also depends on the community, home, and costs that make sense for your retirement.”
, Randy Whetsell, Broker/Owner, Haus Realty & Management
What are common questions about military retirement pay and Tennessee taxes?
Does Tennessee tax military retirement pay?
No. Tennessee does not tax military retirement pay and has no state individual income tax on wages. Confirm current rules with the Tennessee Department of Revenue.
Does Tennessee tax military retirees’ wages from a civilian job?
Tennessee does not impose a state individual income tax on wage income. Other taxes and costs may still apply.
Was Tennessee’s Hall income tax repealed?
Yes. The Hall income tax on interest and dividends was fully repealed effective January 1, 2021.
Does Kentucky tax military retirement pay?
Kentucky generally taxes retirement income, but qualifying military retirees may be eligible for exclusions depending on their circumstances. Check current guidance with the Kentucky Department of Revenue or a tax professional.
Is VA disability compensation taxable by Tennessee or Kentucky?
Federal VA disability compensation is not taxable by any state. Visit VA.gov for official information and ask a tax professional about any related questions regarding your individual benefits.
Is Tennessee always cheaper for a Fort Campbell retiree?
Not necessarily. Tennessee’s income-tax treatment is an important factor, but compare housing, property tax, sales tax, insurance, utilities, transportation, and your day-to-day needs.
Does the Freddie Mac mortgage rate guarantee my rate?
No. The PMMS rates are national averages. Your mortgage rate depends on your circumstances and lender; request personalized quotes before you make a financing decision.
Where can I compare Clarksville and Kentucky retirement locations?
Explore Haus’s guides to retiring near Fort Campbell and comparing Clarksville with Hopkinsville, then speak with a local professional about the communities and properties you are considering.
Talk with a Fort Campbell relocation specialist.
If you are weighing Clarksville, Dover, Stewart County, or Christian County, Haus can help you explore local housing options and compare what matters in your move. Contact Haus Realty & Management to discuss your plans.
This article is for general informational purposes only and is not tax, legal, mortgage, or financial advice. Tax rules and individual circumstances vary. Confirm current requirements with official agencies and consult qualified professionals about your situation.
#FortCampbellRetirement #MilitaryRetirementPay #TennesseeTaxes #ClarksvilleTN #HopkinsvilleKY #MilitaryRelocation #RetireeHousing #VACommunity #TennesseeRealEstate #HausRealty
