Senate committee backs full military retirement income exemption (SB31); narrower COLA proposal discussed (SB26)

The Georgia Senate Finance Committee voted to advance Senate Bill 31, which would remove state income tax on military retirement pay, while separately discussing a narrower bill, Senate Bill 26, that would require the State Revenue Commissioner to apply a cost-of-living adjustment (COLA) to the amount of military retirement income that is excluded from Georgia taxable income.

Senate Bill 31 was presented to the committee as a broad exemption that would bring Georgia into alignment with a majority of states that do not tax military retirement income. The bill’s sponsor told the committee that the measure would put Georgia alongside other Southeastern and Midwestern states that exempt service retirements. Supporters in the hearing cited a fiscal estimate with a median cost of roughly $40 million annually (fiscal-range noted in committee materials between roughly $22 million and $68 million depending on assumptions) and said businesses and veteran advocacy groups support the change as a workforce and retention tool.

Senate Bill 26 proposes a narrower, administratively driven approach: it would instruct the state revenue commissioner to adopt rules tying the maximum excluded amount for military retirement pay to an appropriate federal consumer-price index reported by the Bureau of Labor Statistics or another federal measure. The sponsor described the proposal as a means to allow periodic, proportional increases in the excluded amount that reflect inflation and deflation rather than requiring an immediate statutory increase.

A representative of veterans’ organizations testified in support of the measure. Drew Keenan, identified in committee as the chief financial officer of the Veterans Coalition Foundation and director of employment development for the Veterans of Foreign Wars of Georgia, told the committee: “Georgia is now listed in the top 10 worst states for a retiring vet to settle in.” Keenan said Georgia’s current military-retirement exclusion — which generally exempts the first $17,500 for certain retirees under age 62, with some exceptions that can raise the effective exclusion in particular circumstances — has lost purchasing power over time without a cola mechanism.

Committee members expressed bipartisan support for improving veterans’ tax treatment. One sponsor said the broader exemption (SB31) had unusually broad written support from chambers of commerce, farm bureaus and industry groups. After discussion, a motion to pass SB31 out of committee carried by voice vote with no recorded opposition.

Senate Bill 26 received discussion and questions about administrative implementation and the best index to use. Committee members suggested the bill’s sponsor and legislative counsel refine text to specify indexing details and to consider whether to distinguish combat service or other veteran cohorts; no final committee vote on SB26 was recorded in the transcript.

Next steps: SB31 will move from committee for further consideration by the full Senate. Sponsors and counsel will continue to refine SB26’s rule language if they pursue a committee vote later.