AB53 Military Retiree State Tax Exemption Press Conference (Photo: James C. Ramos)

Veterans and their families in California could soon benefit from significant tax relief after the State Assembly approved Assembly Bill 53, which proposes up to $20,000 in state income tax exemptions. Introduced by Assemblymember James C. Ramos (D-San Bernardino), the bill would exclude military retirement pay and Survivor Benefit Plan annuities from state income taxes between January 1, 2027, and January 1, 2037, at which point a follow-up bill would be required to continue, amend, or sunset the policy.

The American Legion has attended hearings and given testimony over the years to support this bill. The bill received overwhelming bipartisan support in the Assembly and is currently in the Senate, having been referred to the Committees on Revenue and Taxation and Military and Veterans Affairs on June 11.

“We have lobbied for this bill at our Annual Legion Lobby Day event at the Capitol over the years. We have made many visits to our legislators’ offices and made many phone calls about this bill,” said Don Harper, Chair Legislative Commission of The American Legion Department of California. “The Legion has included this bill as one of our top five priority bills over the years. We are so glad it finally passed!”

Ramos, the first and only Native American serving in the state legislature, has introduced similar proposals in previous years. He stressed the economic and social value of keeping military retirees in the state.

“They frequently start second careers and bring critical job skills to California’s workforce. AB 53 honors their contributions and helps ensure they remain part of our communities,” he said.

California stands alone in fully taxing military pensions, despite having more than 141,000 military retirees and over 27,000 survivor beneficiaries who receive Department of Defense payments. The San Diego Military Advisory Council estimates that a tax exemption could yield substantial economic gains: 12,600 new jobs, $1.27 billion added to the state’s gross product, and $2 billion in increased business activity.

“California is the only state to tax the pensions of our military personnel,” Ramos said. “We need to make the state more Veteran-friendly and honor the many sacrifices of our armed services personnel and their spouses.”

The measure is co-sponsored by a coalition of veteran service groups, including The American Legion Department of California, Marine Corps League Department of California, and the California State Commanders Veterans Council. Support also comes from organizations such as the Women Veterans Alliance, California State Retirees, and the San Diego Regional Chamber of Commerce.

“The American Legion was also proud to be a key organization fighting for this bill over the years and assisting in getting AB 53 to the finish line and signed by the Governor,” said Don Harper. “When we all come together as members of the California State Commander’s Veterans Council, CSCVC, made up of The American Legion and many other veterans groups, we have a powerful voice at the State Capitol. Congratulations to all the Veteran organizations that made AB 53 a reality.”

AB 53 also outlines detailed performance metrics and requires the Franchise Tax Board and CalVet to track and report its impact. It explicitly states that no reimbursement is required for local agencies or school districts, and the measure will take effect immediately upon passage as a tax levy.

Ramos pointed out that although California hosts the largest number of Service Members in the country, its retiree population has steadily declined since 2013.

“Our state loses out on millions in federal funds when retirees leave. This bill is a critical step toward reversing that trend,” he said.

Author: Rikki Almanza

Rikki is a Web Content Coordinator for the American Legion, Department of California. With a deep-rooted family connection to the military, Rikki is committed to using her skills and knowledge to provide valuable assistance and resources to servicemembers and veterans.