MOAA National serves in an advisory capacity for state-specific issues such as income tax exemption. Please contact your local MOAA council for more information, as state legislation must originate at the state level. Below, find the latest update on advocacy efforts in California, Virginia, and Maryland.
MOAA’s California Council of Chapters (CALMOAA) is hoping an emphasis on economic development will help convince state lawmakers to eliminate taxes on all uniformed services retirement income and DoD payments to survivors.
The legislation being championed by California Assemblymember James C. Ramos this year will exempt retirees with 20 or more years of service, regardless of age, as well as pensions received by surviving spouses and veterans of the U.S. Public Health Service and NOAA. This law would take effect in the 2024 tax year and run through 2034.
[CHECK YOUR STATE: MOAA's Military State Report Card and Tax Guide]
California is the only state not providing at least some income tax exemption for military retirees, many of whom retire in their 40s or 50s. A December 2021 study conducted by the California Research Bureau found industries associated with DoD, the VA, and the Department of Homeland Security were directly or indirectly responsible for $169 billion of economic activity in California since 2019. That is more than 5% of California’s economy, according to the study.
“Military retirees bring benefits to our state such as stability, job skills used in second careers, and federal funding,” stated Ramos in an email to MOAA. “It’s important to make California more veteran friendly by meaningfully acknowledging the contributions and personal sacrifices made by our former armed services personnel and their families. … It’s time for California to do better by our veterans.”
Previous bills to remove the tax exemption in the last five years have all died in the appropriations committee.
“We are focusing on the workforce development and the technical and vocational jobs that retired military can help fill as part of California's workforce,” said Lt. Cmdr. Jeff Breiten, USN (Ret), who serves as legislative affairs vice-president for CALMOAA.
[RELATED: More Tax and Finance Resources From MOAA]
CALMOAA has solicited hundreds of letters that were sent to California Gov. Gavin Newsom’s office and has received support from AMVETS, local affiliates of the Association of U.S. Army, the San Diego Military Advisory Council, the California State Commanders Veterans Council, the Department of California Marine Corps League, and various chambers of commerce.
“We have met with legislators on both sides of the aisle and all have voiced support and realize the importance of military retirees calling California home upon retirement from the military,” Breiten said.
MOAA’s Virginia Council of Chapters is supporting legislation put forth by Delegate John J. McGuire (HB 1436) and state Sen. Bryce E. Reeves (SB 1194) to remove the age requirement from last year’s tax exemption law for military retirees.
In 2023, Virginia military retirees 55 years and older will have up to $20,000 exempt from their retirement income after receiving a $10,000 exemption in 2022. Retirees will receive a $30,000 exemption in 2024 and $40,000 in 2025 and beyond. The new law would remove the age requirements for all exemptions beginning with the 2023 tax year.
The law includes Guard and Reserve members and also applies to surviving spouses of military retirees, but does not include retirees from the U.S. Public Health Service and NOAA.
“There is very strong bipartisan support to remove the age 55 restriction for military retirees,” said Virginia Council of Chapters State Legislative Affairs Chair Col. Monti Zimmerman, USA (Ret). “MOAA will look at helping get PHS and NOAA added to this in subsequent legislation.”
Virginia MOAA is also supporting a bill sponsored by state Sen. T. Montgomery Mason (SB 1210) that would provide a tax credit of $6,000 for members of the Virginia National Guard serving at the paygrade of O-5 or below. Members O-3 or below currently receive a $3,000 tax credit. If passed, the law would take effect for the 2023 tax year.
As part of the Maryland Military Coalition (MMC), MOAA’s Maryland Council of Chapters is lobbying state lawmakers for a 100% exemption of uniformed servicemembers’ retirement pay with no age restriction.
Currently, all uniformed servicemembers and surviving spouses in Maryland who are 55 and older receive a tax exemption of up to $15,000 on their retirement pay or survivor benefit; those under 55 can claim up to $5,000. All retirees 65 and older, civilian and uniformed services alike, may be eligible to receive up to a $34,300 exemption under the Maryland Pension Exclusion.
The General Assembly is revisiting 2022 legislation that would raise the tax exemption from $15,000 to $20,000 for all uniformed servicemembers aged 55 and older. However, MMC Legislative Director Col. David Dragics, USA (Ret), is confident legislation addressing a 100% exemption will be introduced during the session.
“We received confirmation … it will brought up in the Senate’s Budget & Taxation Committee,” Dragics wrote in a Jan. 12 email to MOAA. “On the House side, we've met with the Chair of the Ways & Means Committee who indicated that she would be discussing this issue with the Speaker of the House.”
Like California, Maryland would like to see younger retirees receive this benefit as a way to attract more veterans to the state. In addition to waiving the age requirement, Dragics said the council would be happy with a phased-in approach like Virginia adopted last year.
MMC is also advocating for the state government to add an income tax check-off box to benefit the Maryland Veterans Trust Fund, a nonprofit that provides short-term, non-emergency mortgage, rental, and utility assistance. The money from the fund goes to landlords, mortgage companies or utility companies to assist veterans or surviving spouses of veterans.
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