In The Fifth Element it is mentioned at one point that Korben Dallas retired from the military 6 months ago and became a taxi driver. But is it ever established why he left the military? He seems to have issues being a very good taxi driver as he is very low on driving points and his boss seems upset that he continuously damages the taxis.
He had completed his length of Military Service
Retired tends to suggest he came to the end of his Military Service, as opposed to an honourable / dishonorable discharge, where he would have left before his service had ended with a good / bad record, or a medical discharge.
We don't know too much about Korben Dallas, such as his age or when he joined up.
If we take Bruce Willis' age when he played Korben Dallas, Korben would have been 41.
In the US military you can retire, and receive a pension, from the age of 37. This appears to be dependent on a minimum Length of Service of 20 years.
I am basing this on the US military, but from personal experience, I know the British have a similiar required length of service of 22 years (to receive a full and early pension). I wouldn't see why in the future the Length of Service required would be too different.
This means (taking 41 as his age at the time of the movie) Korben would have had to have been no older than 21 when he joined up. This is not unfeasible as many join up fairly young (my own brothers were 18 & 16 when they joined - and are still in 34 years later).
At the moment no earlier retirement appears to be allowed due to Special Forces involvement, so we will have to assume this would be the same in the future.
Korben Dallas appears bored or is having trouble readjusting to being in civilian life. Something that affects many ex servicemen, and affects ex special forces even more, it is one reason suicide rates / homelessness are so high amongst vets. He just doesn't care about being a taxi driver.
Cearon O'Flynn's answer appears to be correct. I was able to find confirmation of this according to some of the text in the original script. I'm adding it as another answer since it provides additional detail.
MUNRO: Major Dallas, if our calculations are correct you still have 57 hours owed to the Federal Army on your enlistment which is more than you will need for a mission of the utmost importance.
This would seem to confirm that he left because he had fulfilled his active duty... but General Munro was able to compel him to go on the mission because he still technically owed 2 day and some hours of service.
This version of script didn't make it to the film and we only know that he left service 6 months ago.