Assemblymember James Ramos (Photo: Instagram)

On December 3, Assemblymember James C. Ramos, who represents the 45th Assembly district, reintroduced legislation known as AB 53. This bill, titled Personal income taxes: exclusion: Military Services Retirement and Surviving Spouse Benefit Payment Act, proposes exempting military retirement and Survivor Benefit Plan, SBP, payments from state income taxes, providing substantial financial relief to Retired Veterans and their spouses.

This legislation is Ramos’s third attempt to secure tax relief for retired Armed Forces personnel and his tenth legislative effort to grant such an exemption; last year’s bill was AB 46. California is currently the only state that taxes all or part of military retiree pensions.

This bill, AB 53, has received support from several organizations, including The American Legion-Department of California, the Marine Corps League-Department of California, and CALENGUS, with CALMOAA expected to join as a sponsor soon. The Governor’s Administration is in discussions with Ramos and is likely to back AB 53, particularly with its planned implementation date in January 2027. Individuals are encouraged to contact their respective legislators to co-author the bill.

AB 53 seeks to amend the Personal Income Tax Law, which currently taxes individual income but excludes certain items, such as combat-related compensation. Starting January 1, 2027, and continuing through January 1, 2037, the bill proposes to exclude from taxable income both retirement pay from the federal government for service in the uniformed services and annuity payments from the Department of Defense Survivor Benefit Plan.

The bill includes necessary findings and declarations and complies with the requirements for new tax expenditures by detailing specific goals, performance indicators, and data collection needs. It mandates the Franchise Tax Board and the Department of Veterans Affairs to provide data for a Legislative Analyst report while imposing strict limitations on the use of taxpayer information.

Key points of the bill include:

• Recognition of Service Members’ dedication and the need to retain skilled military personnel.
• Emphasis on the economic benefits of keeping Retired Service Members in California.
• Exclusion of military retirement and SBP payments from taxable income during the specified period.
• Detailed performance indicators and data collection requirements to assess the bill’s effectiveness.

AB 53 also addresses the state’s obligations to reimburse local agencies and school districts for costs mandated by the state, specifying that no reimbursement is required for this act. The bill will take effect immediately as a tax levy.

“I’m not one to give up on something I think is important,” Ramos said. “California is the only state to tax the pensions of our military personnel. We need to make the state more Veteran-friendly and honor the many sacrifices of our armed services personnel and their spouses.”

Ramos added, “Military retirees bring benefits to our state such as stability, job skills used in second careers, and federal funding. These men and women served our nation in a variety of valuable capacities, and they and their families have frequently done so at great personal sacrifice. California needs to more fully acknowledge the contributions they make.”

Although California is home to the largest number of active-duty military personnel in the country, its military retiree population has seen a steady decline since 2010.

“Military retirees contribute to the state’s workforce development where they choose to retire. Our state loses out on millions of dollars in federal funds that follow military retirees after retirement,” Ramos stated.

Author: Rikki Almanza

Rikki is a Web Content Coordinator for the American Legion, Department of California. With a deep-rooted connection to the military, a spouse who is a Navy veteran, a father who served in the Air Force for 25 years, and a grandfather who proudly served, Rikki is committed to using her skills and knowledge to provide valuable assistance and resources to servicemembers and veterans.