By MOAA Staff

MOAA National serves in an advisory capacity for state-specific issues such as income tax exemption. Please contact your local MOAA council as state legislation must originate at the state level.

While some state legislative cycles stop spinning over the summer months, others continue throughout the year. Here’s a look at the status of some bills that could change state tax exemptions for uniformed service retirement pay; find out more about the exemptions and other tax policies in your state at MOAA’s Military State Report Card and Tax Guide.

California

The bill: SB 1407 would increase the state’s $20,000 annual tax exclusion for uniformed service retired pay to $40,000. An earlier version would’ve raised it to $80,000.

The update: The bill passed the Senate by a 39-0 vote on May 28, then moved to the state Assembly, where it passed out of both the Revenue and Taxation and the Military and Veterans Affairs committees. It was referred to the Assembly Appropriations Committee late last month.

What’s next: The bill is “an important step toward full exemption,” said Col. Bil Nelson, USAF (Ret), vice president of legislative affairs for MOAA’s California Council of Chapters (CALMOAA). “Last year we made a great start, and we’re hoping to continue moving forward incrementally this year.”

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Connecticut

The bill: SB 1, the state’s FY 2027 budget, includes language expanding the state’s full exemption of armed service retirement pay to retired officers from the U.S. Public Health Service Commissioned Corps.

The update: Gov. Ned Lamont signed the budget into law on May 26, making Rhode Island the only New England state that exempts armed forces retirement pay but continues to tax other uniformed services retirement pay.

What’s next: “Thanks to the effort and advocacy of a retired USPHS officer and a state legislator, the U.S. Public Health Service is now recognized,” said Rear Adm. Joan Hunter, USPHS (Ret), a member of MOAA’s board of directors. “It’s the amazing work of our officers that educates many about our mission, proud history and years of service dedicated to protect, promote, and advance the health and safety of our nation.” Retirees from the NOAA Commissioned Officers Corps are not included in the language, but Hunter said a retired NOAA Corps officer is actively campaigning for another update to the law that would include his service.

Delaware

The bill: SB 219 increases the state’s $12,500 tax exemption for uniformed service retirement pay to $15,000 in the 2027 tax year, to $20,000 in 2028, and to $25,000 in 2029 and thereafter.

The update: The bill passed the House on July 1, the last day of the legislative session. It is expected to be signed into law by Gov. Matt Meyer in the coming days, but it had not been presented to the governor as of July 20.

What’s next: “We are pleased with this giant step in the right direction,” said Col. Gene Thornton, USA (Ret), president of the MOAA Dover Chapter. “We will be focusing on a local version of a ‘claim shark law’ and will continue working towards full tax exemption for military retirees in the future.”

[RELATED: Bipartisan Bill Would Protect USPHS, NOAA Corps Retirement Pay From Federal Shutdowns]

New Jersey

The bill: A5215 would expand state tax exemptions for armed forces retirement pay to cover all uniformed services, adding retirees from the USPHS Commissioned Corps and the NOAA Commissioned Officer Corps.

The update: The assembly bill is identical to Senate legislation introduced in January. That bill was moved to the Senate Military and Veterans’ Affairs Committee shortly after its introduction and has not advanced since.

What’s next: Unlike other states with short legislative calendars, New Jersey’s session is not set to adjourn until Dec. 31. Bills that do not pass this session can carry over into 2027.

South Carolina

The bills: H 4812 and S 771 both would expand state tax exemptions for armed services retirement pay to cover USPHS and NOAA officer retirees.

The update: The state legislature’s session concluded in May with neither bill moving forward; the body reconvened for a special session, but it will address only redistricting issues. There is no legislative carryover into the 2027 session.

What’s next: MOAA leaders in South Carolina said they received support on both the Senate and House sides, but neither bill made it out of subcommittee. The plan is to resume efforts again this year in preparation for the next legislative session.