Federal Income Tax Withholding
Your federal income tax withholding, or FITW, is determined by the DD Form 2656 you completed at the time of your military retirement or by subsequent W-4 Form on file with DFAS. This information establishes the marital status, exemptions and, for some, non-tax status we use to calculate how much money to withhold from your taxable income for your annual tax liability.
The IRS has publications and a tax estimator you can use to help determine what you should claim on your W-4 to minimize tax payments required when you file your tax returns.
Changing your Federal Income Tax Withholding (FITW)
Your circumstances may change and these may have an effect on your tax liability. When this happens, you can adjust your federal income tax withholding in myPay or by submitting a new W-4 (for retirees) or W-4P (for annuitants). You should talk to a tax advisor or review IRS guidance before doing so.
If your FITW isn’t enough to satisfy your tax obligations, you may choose to have an additional amount withheld. Some may also elect to have a flat amount withheld by writing “Withhold additional FITW only” on their W-4 or W-4P.
The easiest, most secure and fastest way to change your tax withholding is by using your myPay online account.
Or, mail or fax your signed, completed forms:
Send IRS W-4 Form for Retirees to:
Defense Finance and Accounting Service
U.S. Military Retirement Pay
8899 E 56th Street
Indianapolis, IN 46249-1200
Fax: 1-800-469-6559
Send IRS W-4P Form for Annuitants to:
Defense Finance and Accounting Service
U.S. Military Annuitant Pay
8899 E 56th Street
Indianapolis, IN 46249-1300
Fax: 800-982-8459
Filing a Withholding Exemption
If you claim your retirement pay should be entirely exempt from Federal Income Tax Withholding (FITW), the IRS requires that you re-certify this status each year by submitting a new W-4 Form. If you do not re-certify your "Exempt" status, your FITW status will default to "Single" with zero exemptions. Please allow 30 days for processing of your request.
Taxation of Military Retired Pay
Military retired pay is paid for many different reasons under many different laws. There are differences in the types of pay a military retiree might receive and the tax laws that apply to them. Whether a portion or all of an individual’s military retired pay is subject to federal income taxes depends on his/her individual circumstances.
A military retiree can either use myPay or send an IRS Form W-4 to alter the amount DFAS withholds for federal income taxes from their military retired pay.
An individual’s choice to have no withholding for federal taxes does not impact whether the individual’s military retired pay is actually subject to federal income taxes. Ultimately, the IRS will determine the amount of taxes owed on the military retired pay.
Additional Information
DFAS cannot provide tax advice. Please consult a tax professional or the IRS.
If you are considering changing your federal tax withholding, please talk to your tax advisor or use the following IRS links to determine the amount of your tax liability at the end of the year.
• IRS Withholding Estimator
• IRS Publication 505 – Tax Withholding and Estimated Tax
Page last updated February 16, 2023