How do you respond when someone says "Thank you for your service"?

My response is always thank you for your kindness! It is my honor to have served the greatest nation on earth

I usually say You're Welcome. As a AF Combat Controller 69-73, I don't have the best of memories coming home. Being in uniform at that time, wasn't considered a good thing. I've mellowed and try to be cordial, as most of the people who say it, weren't born at that time, to know the unpleasantries of the VN War there and at home. Those who were, you're never sure if they were one of the many protesters. In my mind it's those people, guys who chose to go to Canada AND my Family and friends who I decided to defend. My Dad (Coast Guard) & Uncle (Navy) served. I knew they served, as my children & grandchildren know I did, but that's about all. There are no family war stories as I've learned, war just means horror and loss. I'm not bitter, because I came home, I'm remorseful that 58,220 didn't.

Some times I say thank you and others the best way to thank me for my service is to vote.

"Thank You. It was an honor to serve."

Thank you for the pension? LOL

You say, "Thank you." That's what I say.

I just half-smile anf nod my head. I actually wish people wouldn't do that.

I just say "Thank you, It was my honor ."

It depends on how much I dislike the person.
2nd Amendment Supporter etc...
a) Thanks, it was an honor

If not (the communist type)
b) Don't thank me. I was just being an American. You should try it sometime.

Though, the communist types don't usually thank me unless I'm at a political event with my conservative state rep and their political opponents feel like they must show me the same courtesy. Either way, the response works well.

I ask them, have you served? If they say no, I say why not? Your country demands that all serve, unless you have a very good reason not to. It's the least you can do for your country.