A bill introduced by California Assemblymember James C. Ramos would make military retirees’ service pensions tax exempt in California. (Photo: Kevin Sanders for California Globe)
A bill introduced by Assemblymember James C. Ramos (D-Highland) on Jan. 10 would exempt military retirees’ service pensions from California income taxes possibly as early as 2023.
The bill, AB-1623, would only apply to taxpayers over the age of 60 who completed 20 years of military service, retired from the Commissioned Corps of the U.S. Public Health Service, or retired from National Oceanic and Atmospheric Administration Commissioned Officer Corps.
In November, Assemblymember Ramos stated, “these men and women have served our nation in a variety of capacities and they and their families have frequently performed their service at great personal sacrifice. California needs to more fully acknowledge the contributions they make.”
The bill is garnering support from veteran service organizations such as the California State Commanders Veterans Council, or CSCVC. The VSO notes that the bill would “honor those who dedicated their life to serving their country” and “attract uniformed service retirees to California for the purposes of strengthening the state’s skilled workforce.”
If the bill is passed in its current form, the California Assembly would have until Jan. 2033 to implement the change.
Currently, California’s Personal Income Tax Law only excludes combat-related special compensation.
Interested readers can visit the CSCVC’s website to send a message to their local representative.
Author: Christian Southards
Coming from a family with a proud military background and wanting to contribute his writing skills to a worthy cause, Christian began writing for the California American Legion in August of 2020. His father is a 25-year Army Veteran and his grandfather served in the Navy during Vietnam.
California Assembly Appropriations Committee tabled AB-1623 tabled last year without voting on it. It became Assemblymember James Ramos support of Veterans that he submitted AB-46. This bill will exempt military retirees immediately. We need members of the Appropriations Committee (especially the chair Chris Holden and the Deputy Chair) to hear our voices. Please contacted the Appropriations Committee and your Assemblymembers asking them to vote in favor of AB-46 bill.
This year 2023. Assemblymember James Ramos has submitted Assembly Bill (AB) 46, Military Services Retirement and Surviving Spouse Benefit Payment Act, received very positive support in the bill’s hearing before the Revenue and Taxation Committee, March 13th.
The next key step in getting AB 46 to a vote in the Assembly will be the Appropriations Committee. Chapter members have been very helpful writing to the Governor and their representatives. Now we need to focus our effort on letters of support to the Appropriations Committee. Your correspondence should encourage support for AB 46 because it will improve California’s economy by retaining a valuable, well educated, and highly talented labor force.
Please join our Grass Roots Advocacy support for Assembly Bill (AB) 46. The passage of this bill will keep our valuable military retirees, who dedicated their lives to our country, their surviving spouses, and their families in California!
California is the only state in the country that does not provide some form of tax relief for military retirees. California continues to lose military retirees and surviving spouses to other states. Military retirees who remain in California provide an available workforce to fill many of the 40,000 technical and over 20,000 medical field vacancies in California. Additionally, many military retirees, surviving spouses, and children will use their federal GI Bill educational benefits to pursue advanced degrees in STEM and medical occupations to add to California’s much needed workforce.
AB 46 will be presented to the Assembly’s Appropriations Committee in April, please show your support for AB 46 by sending a letter of support to the Appropriations Committee (letter further below).
Please contact the Appropriations Committee before April 15th. Can contact via:
Email: Please cut and paste the letter below and send via email to approps.committee@assembly.ca.gov
Mail: Assemblymember Chris R. Holden
Chair, Assembly Appropriations Committee
1021 O Street, Suite 8220
Sacramento, California 95814
Also contact your Assemblymember via the following Voters Voice link which sends an auto-generated letter of support to your California Assemblymember: https://www.votervoice.net/mobile/CSCVC/Campaigns/102352/Respond?fbclid=IwAR3pQDy_1nFSIgyWCohGsxA1KnxjWZx3r-NHDIDL9DBJQmJ9ThoqOPpZAyY
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AB 1623 — Personal Income Taxes: Exclusion: Uniformed Services Retirement Pay: Survivor Benefit Plan Payments. This bill reads to exclude retired veterans under the age of 60. It should be inline with many other states that include all retired veterans who have given 20+ years of service. California loses a large number of veterans annually due to the taxation of military retired pay and property taxes, while other states are more military friendly and absorb this qualified workforce. It may be all about the money for the state, but you are losing a large number of folks who put money back in to the state regardless of the taxes on their military retirement pay and contribute to the workforce. It is not like military retired members just stop working and lives off of their retirement pay. We get better paying jobs that we are taxed on and the state still gets their money. When you do not create the incentives to keep us, you will lose to other states where we can flourish and get the most bang for our buck.
What is the latest status of this bill?
The next time a politician incumbent or candidate states they support the military, ask their position on this subject and simply wait for an answer. Be certain to emphasize the word “ONLY” state that fully taxes military retirement and survivors benefit pay.
It is about time California honor those that served in the US Military. As stated before California is the ONLY state plus the District of Columba that still tax Military Retirement pay. With a surplus of $75 billion California can easily afford to give this benefit to retired military living in the state. This change needs happen ASAP.
The state government has until 2033 to act on it? Are you kidding me? When 2033 rolls around the Democrats will probably not act on it passing
According to a recent article on Military.com, in 2022, six more states have joined the ranks of those exempting, or partially exempting, military retirement pay from state income tax liability. This leaves ONLY CALIFORNIA and the District of Columbia fully taxing military retirement income. NOT a list you should be proud to be #1 on.
Thanks for trying. I believe California is one of only 5 States that taxes the retirement pay of veterans.
I totally agree it is all about money and California has been reaping the benefits from the Veteran’s. However, I bet someone has noticed a lot of Veteran’s have been leaving California now for quite sometime because of the taxes. I’ll wait and see how this new bill gets approved. I have been debating for several years now on whether I should relocate. Too many of my Veteran friends have relocated to other states and have been telling me to do the same. I love California but there does come a time when enough is enough!
I retired at age 45…..I’m not waiting around 15 years to enjoy a benefit I can take advantage of in another state right now. Why would I want to pay taxes in CA for 15 more years?? Get rid of the age stipulation.
Hi Chris,
Visit the California State Commanders Veterans Council (CSCVC) website at https://calcommanders.org/ to send a message to your local representative.
I hope this helps. Take care.
Rick Pushies
Web Team
I’ll be long gone (out of my home state) if they wait until 2033 to implement – otherwise, I would actually consider staying here. Yeah, California will still get my SSN income, but ya know, the weather is good 🙂
According to information I have, California does not tax social security
California does tax Social Security.
@Chris.. Agree 100%. The age stipulation does not inspire me and my family to remain in California. Having retired at such a young age, I’ll have to wait another 10+ years to take advantage of this tax exemption. As Chris stated, we can relocate and take advantage of this tax exemption in another state. Many other states who didn’t allow for the 100% exemption at least added an age-based tier structure below 60 years old so “most all” military retirees could take advantage of the tax break. While I don’t want to seem ungrateful for the efforts of James Ramos (D)*, Kelly Seyarto (R)*, Brian Jones (R), Devon Mathis (R), Eloise Reyes (D), Rudy Salas (D), Marie Waldron (R). However, I believe an age-based tier structure below 60 years old is warranted.
9 states do not tax personal income
Alaska
Florida
Nevada
New Hampshire doesn’t tax wages but does tax dividends and interest
South Dakota
Tennessee stopped taxing dividends and interest in 2021
Texas
Washington
Wyoming
25 states exempt military retirement income
Alabama
Arizona stopped taxing military retirement in 2021
Arkansas
Connecticut
Hawaii
Illinois
Iowa
Kansas
Louisiana
Maine
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Nebraska stopped taxing military retirement in 2022
New Jersey
New York
North Carolina stopped taxing military retirement in 2021
North Dakota
Ohio
Pennsylvania
Utah stopped taxing military retirement income in 2021
West Virginia
Wisconsin
2 states (plus D.C.) fully tax retirement income
California
Vermont
Washington, D.C. ended a $3,000 exclusion for military pensions in 2015
7 states spare a portion of military retirement income
Colorado
If you’re a veteran between the ages of 55 and 64, you can exclude up to $20,000 from your taxable income.Those 65 and over can exclude up to $24,000. Those under 55 can exclude $10,000 in the 2021 tax year.
Indiana
In the 2021 tax year, up to $6,250 of military retirement income is exempt off the top, plus 75% of retirement pay over that.Starting with the 2022 tax year, military retirement benefits will be fully deductible.
Kentucky
Military pensions are fully exempt for service members who retired before 1997.
Otherwise, up to $31,110 in public pension income is tax-free (down from $41,110 before 2018).
Maryland
The first $5,000 of military retirement income is tax-free, and that amount increases to $15,000 when you turn 55. Those over age 65, or who are totally disabled or who have a spouse who is totally disabled, may get additional tax breaks. For 2021, the maximum deduction for pensions is $34,300, minus any Social Security benefits.
Oklahoma
Either 75% or $10,000 of your retirement pay is tax free, whichever is greater.
Oregon
You may be eligible to deduct a portion of your retirement pay if you served before Oct. 1, 1991. If you didn’t, your military retirement is taxed normally.
South Carolina
If you’re under 65, your deduction is limited to $17,500. You need to be earning other income to get this deal; otherwise only $3,000 will be exempt. If you’re 65 or older, you can deduct $30,000, without any need for additional income.
7 states spare a portion of general retirement income
Delaware
If you’re under the age of 60, you can exclude up to $2,000. Those over the age of 60 can exclude up to $12,500.
Georgia
The state offers no special exemption for veterans but allows anyone who is permanently disabled or between the ages of 62 and 64 to exempt $35,000 of their retirement income. That number is $65,000 for those over age 65.
Idaho
If you’re 65 or older — or disabled and at least 62 — your public pension may be partially exempt. Up to $34,332 may be exempt for single filers (or $51,498 for joint filers), but those figures will be reduced by other retirement benefits you receive, like Social Security. The limits change each year.
Montana
This state does provide an exemption for pensions, but only for a few thousand dollars and only if your income is relatively low. For the 2020 tax year, single filers with a federal AGI below $38,605 (or $40,790 for joint filers) were able to spare up to $4,370.
New Mexico
All seniors 65 and older can get a tax deduction of up to $8,000, depending on their income level. (Those 100 or older who are not dependents are fully exempt.) Seniors can also get thousands in exemptions and credits for unreimbursed medical expenses.
Virginia
This state fully taxes military retirement income, with an exception for Congressional Medal of Honor recipients. However, it provides seniors born before Jan. 1, 1939 with a tax deduction of $12,000. For anyone 65 or older born after that date, the deduction is reduced by $1 for every $1 of their federal AGI that exceeds $50,000 (or $75,000 for married couples).
Rhode Island
The Ocean State offers some residents who have reached their full Social Security retirement age a $15,000 exclusion for retirement plans. For the 2021 tax year, single filers with a federal AGI above $87,200 (or $109,050 for married couples) are not eligible.
These veterans most likely did not earn their retirement in California. They earned it at the East German Border, or Vietnam or South Korea or Panama or Honduras…..What claim should the state of California have on that????
It’s all about the money. Some military folks can put 20 years in and retire as early as 38-40 years old. That’s a lot of taxable income California would miss out on so there’s no incentive for the state to do so. The “workforce” line is pandering.
How about we take the money lost from veteran retirement taxes and those who dedicated their lives to our nation from wasteful programs that promote incentives and benefits for illegal immigration and discriminating woke programs pushing political agendas. I have been a resident of California for two years only because I retired from the military here. I will jump on the first opportunity to leave as our state government is not military friendly. Seem more of lip service to pretend they are military friendly when reality is they only are if it benefits their reelection. Can’t buy land, can’t buy a home, taxes all around are outrageous, and gas prices are ridiculous. Maybe when I am forced to drive an electric car i can afford to live in this state lol.
Why not include all that retired after 20 years of military service? Why should we have to wait until 60 years old to enjoy this entitlement?
Agree why wait till the age 60. Logically it is about money and not about keeping veterans in California for jobs.
I am about to retire from army reserve. 11 years active and 18 years reserve. I work for the department of the army as a civilian along side active army personnel and the conversations surrounding retirement always start with “What state are you going to retire to?” California is not even on the list of possibilities. The taxes here are too high for retirees and the cost of living is ludicrous. Even though I have famikyvand roots in CA it doesn’t make sense to stay. If this bill were to make it through, ki don’t know, maybe I could reevaluate my prospects. But as of today, CA is NA for tax reasons