Quoted:
Depends on if you have one year of drills between 79 and 89.  That's iffy unless you did some extended active duty.  Also, if you have disability, that portion is not taxable.  Wish I didn't need to know that little tidbit.  Your DD 214 should list everything you need to know, but you might also need a point summary.  In 1989, we all basically got rear-ended and had our pension plans gutted.  You were grandfathered in.  You might want to call a Tax preparer who is near Ft. Bragg.  They might deal with it more often.

Quoted:
Search engines are your friend.  Its 5 years of creditable service before 1989.  Did you meet drill point requirements in 1983, 1984, 1985, 1986, 1987, 1988, and before 12 August 1989?  Was that service -and your active duty - creditable for retirement?

This lays it out.


Retired Military Pay: If an individual had five years of creditable service as of August 12, 1989, all military retired pay is exempt from taxes. Otherwise, a deduction of up to $4,000.00 ($8,000.00 on joint returns) is allowed for military pay or survivor's benefits.


Military Disability Retired Pay: Retirees who entered the military before September 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service-related disabilities also is free from federal income tax, but there is no guarantee of total protection.


VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes.


Military SBP/RCSBP/RSFPP: If an individual had five years of creditable service as of August 12, 1989, all military retired pay is exempt from taxes. Otherwise, a deduction of up to $4,000 is allowed for survivor's benefits. Generally subject to state taxes for those states with income tax. Check with state department of revenue office.