Committee advances bill to exempt military retirement pay from state taxes, citing retention and economic benefits

Senator Archuleta presented SB 1407 to exempt military retirement pay and survivor benefits from state income tax, arguing that the change would help keep veterans and their economic contributions in California. "This bill will exempt a veteran's military retirement pay as well as a surviving spouse's benefits payment from state taxes," the author said, noting previous modest exemptions and arguing more is needed to stem an exodus of retirees.

State Treasurer Fiona Ma testified in support and described broader economic and workforce benefits from retaining military retirees. "I think this bill...would encourage them to stay here in the state and create more economic development," she told the committee, citing an average retirement of about $38,000 annually for many retirees.

David Boone, president and CEO of the San Diego Military Advisory Council, and representatives from veterans organizations urged the committee to support the bill, pointing to demographic trends in which other states that exempt retirement pay have grown their veteran populations.

Opposition was limited at the hearing; the California Teachers Association registered respectful opposition in the public record. Committee members expressed appreciation for the author's outreach and accepted committee amendments. The clerk recorded a motion to pass the bill as amended to the Committee on Military and Veterans Affairs and the motion passed by recorded vote as reflected in the transcript.

Next step: SB 1407 was passed out of this committee as amended and sent to the Committee on Military and Veterans Affairs for further consideration.