It isn't a final law yet, but has passed the US Senate:

The Senate has passed legislation clarifying U.S. law to ensure that veterans and service members not in uniform can salute the flag.

S 1877, sponsored by Sen. James Inhofe, R-Okla., would address the ambiguity of current law, which states that veterans and service members not in uniform should place their hand over their hearts, without specifying whether they can or should salute the flag.

“The salute is a form of honor and respect, representing pride in one’s military service,” Inhofe said. “Unfortunately, current U.S. law leaves confusion as to whether veterans and service members out of uniform can or should salute the flag.”

Inhofe said he believes this is “an appropriate way to honor and recognize the 25 million veterans who have served in the military and remain as role models to others citizens. Those who are currently serving or have served in the military have earned this right, and their recognition will be an inspiration to others.”

The House would have to agree to the legislation before it could become law.
From Army Times.com

After years in uniform, saluting the flag, I must admit I've 'felt funny' with the hand-over-heart thing, as a civilian/veteran. My right arm always twitches to render that snappy salute SGT Johnson taught me in '72, only to stop, mid-salute, and cover my left shirt pocket.

So, what are the rules or traditions in your country? Do civilians honor/recognize your flag? How?

How about active soldiers and veterans?