Sacramento Snapshot: California bill would exclude military retirement pay from taxable income

"For too long, our veterans have been faced with a difficult decision: Stay in this beautiful state while struggling to make ends meet with rising costs of living or move to a state that financially incentivizes them to join their labor force and feed federal dollars into their economy. I've heard from far too many of my brothers and sisters who say California has become too expensive for them to live and say a tax exemption on their retirement pay would be the determining factor on whether they stay."

"Veterans staying in California will pay sales, property and use taxes, benefiting local governments. But exempting military retirement pay for retirees will ensure California retains these highly skilled professionals and keeps the reinvestment of federal dollars and wages from second careers."

"California lost more than 24,000 military retirees between 2010 and 2022. But during that same time period, the veteran retiree population grew by 17% in the U.S., while California saw a 14% reduction, one of only five states to see a decrease in that population."

California legislators are advancing Senate Bill 1407 to exempt veterans' military retirement pay and survivor benefits from state income tax. The bipartisan effort aims to retain skilled veterans who have been leaving California due to high living costs. Data shows California lost over 24,000 military retirees between 2010 and 2022, while the national veteran retiree population grew 17% and California declined 14%. Governor Newsom previously signed legislation allowing up to $20,000 annual exclusion; this bill removes that cap entirely. Proponents argue retained veterans will contribute through sales, property, and use taxes while reinvesting federal dollars and second-career wages into the state economy.

Read at www.ocregister.com