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.  

One state moved to expand its tax exemption for military retirement pay regardless of age in recent weeks, another added more services to its exemption, and still more bills addressing exemptions remain in process in state legislatures nationwide.

Find the latest updates from five states below. Has your state made a move to change its rules on taxing military retirement pay? Is your local MOAA council or chapter involved? Let us know at editor@moaa.org.

[NEWLY UPDATED: MOAA’s Military State Report Card and Tax Guide]

Georgia

A law signed May 13 by Gov. Brian Kemp will exempt up to $65,000 in military retirement pay from Georgia state tax regardless of the retiree’s age beginning with the 2026 tax year. 

Current state law allows for an exemption of up to $35,000 of military retiree income for those under age 62; all Georgia residents ages 62 to 64 can claim a $35,000 exemption on any type of retirement income, and those 65 and over can exempt up to $65,000 of any type of retirement income.

“This law will allow the state of Georgia to retain and attract military talent that would have otherwise gone to more military-friendly states,” said Cmdr. Keith Walters, president of MOAA’s Georgia Council of Chapters. “This is a win-win.”

As with the previous tax exemptions, the new law does not address survivor benefits and does not cover members of the commissioned corps of the U.S. Public Health Service or NOAA. Walters said discussions are underway among advocates and lawmakers to update the law’s language so that it covers all “uniformed services” and would therefore include retired officers from USPHS and NOAA.

Indiana

A law signed April 10 by Gov. Mike Braun brings parity to the state’s treatment of uniformed service pay and retirement income, ensuring active, reserve, and retired members of the Space Force, along with active and retired officers with USPHS and NOAA, receive the same exemption as others in uniform.

HB 1280 also covers benefits paid to the survivors of those servicemembers. The bipartisan legislation passed both the state House and Senate via unanimous votes. 

The bill takes effect with the 2025 tax year and sunsets July 1, 2028.

California

A California Assembly bill which would have excluded all military retirement and Survivor Benefit Plan (SBP) income from state taxes was amended in February to limit the exclusions to $20,000.

AB 53 unanimously cleared the California Assembly on May 29. The bill now goes to the state Senate, where there is strong bipartisan support, said Cmdr. Jeff Breiten, USN (Ret), vice president of legislative affairs for MOAA’s California Council of Chapters (CALMOAA).

The amended bill aligns with Gov. Gavin Newsom’s 2025-26 budget proposal, which would exempt the same amount of military retirement income.

The legislation would cover all uniformed services retirement pay, to include commissioned corps members of USPHS and NOAA. It would cover tax years from 2025 to 2030, at which point it will sunset. A bill providing a full exemption of retirement pay passed the assembly unanimously in May 2023 and was held over to the 2024 legislative session, but it did not reach the Senate floor before the session ended.

"With the passage of AB 53, California may no longer be the only state that fails to provide an income tax exemption on military retirement pay. It is a step in the right direction,” said Breiten, who also noted, “with the limited exemption and income limitations Governor Newsom has imposed, California will continue to rank poorly against the other 49 states, many of which provide a full exemption on military retirement pay without any income limitations.”

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Maryland

Multiple pieces of legislation designed to increase partial exemptions for military retirement income did not pass before the legislative session wrapped up in April.

A House bill would have increased the available exemption for retirees under age 55 to $20,000, up from the current $12,500. Another bill – the Keep Our Heroes Home Act, filed in both the state House and Senate – would have increased the exemption for ages 55 and over to $40,000, up from $20,000, over a two-year span.

“We are so disappointed,” said Capt. Lynn A. Nash, USPHS (Ret), legislative liaison for the Maryland Council and Chapters. ““The General Assembly was focused on remedying the $2.7 billion budget shortfall. We hoped to at least get the age restriction removed, but it didn’t happen. We are already reaching out to legislators and the Maryland Veterans Caucus to discuss next steps. We’ll be back at it next session.”

Oregon

An amended version of a Senate bill offering up to $17,500 in military retirement pay exemptions kept the figure but changed the group of retirees affected.

As introduced, SB 225 would have exempted up to $17,500 for retirees ages 62 and younger. The engrossed version, if passed, would apply that exemption to retirees age 63 and up.

The state’s Senate Committee on Finance and Revenue recommended passing the legislation June 2, moving the legislation forward to the full Senate. The measure would cover retirees from the active and reserve components of the Army, Marine Corps, Navy, Air Force, Space Force, and Coast Guard.

Existing retiree tax exemptions in Oregon apply only to service accrued prior to Oct. 1, 1991. Those who completed their time in uniform before that date have a full exemption, while a partial exemption is available to those who served a portion of their time before the cutoff.