MOAA’s California Council of Chapters (CALMOAA) is hoping an emphasis on economic development will help convince state lawmakers to eliminate taxes on all uniformed services retirement income and DoD payments to survivors.
The legislation being championed by California Assemblymember James C. Ramosthis year will exempt retirees with 20 or more years of service, regardless of age, as well as pensions received by surviving spouses and veterans of the U.S. Public Health Service and NOAA. This law would take effect in the 2024 tax year and run through 2034.
California is the only state not providing at least some income tax exemption for military retirees, many of whom retire in their 40s or 50s. A December 2021 study conducted by the California Research Bureau found industries associated with DoD, the VA, and the Department of Homeland Security were directly or indirectly responsible for $169 billion of economic activity in California since 2019. That is more than 5% of California’s economy, according to the study.
“Military retirees bring benefits to our state such as stability, job skills used in second careers, and federal funding,” stated Ramos in an email to MOAA. “It’s important to make California more veteran friendly by meaningfully acknowledging the contributions and personal sacrifices made by our former armed services personnel and their families. … It’s time for California to do better by our veterans.”
Previous bills to remove the tax exemption in the last five years have all died in the appropriations committee.
“We are focusing on the workforce development and the technical and vocational jobs that retired military can help fill as part of California’s workforce,” said Lt. Cmdr. Jeff Breiten, USN (Ret), who serves as legislative affairs vice-president for CALMOAA.
CALMOAA has solicited hundreds of letters that were sent to California Gov. Gavin Newsom’s office and has received support from AMVETS, local affiliates of the Association of U.S. Army, the San Diego Military Advisory Council, the California State Commanders Veterans Council, the Department of California Marine Corps League, and various chambers of commerce.
“We have met with legislators on both sides of the aisle and all have voiced support and realize the importance of military retirees calling California home upon retirement from the military,” Breiten said.
Assembly member Ramos. He has officially introduced AB 46 Personal income taxes: Military Services Retirement and Surviving Spouse Benefit Payments Link: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB46California-AB-46
Work Force Letter
The Honorable Governor Gavin Newsom
1303 10th Street, Suite 1173
Sacramento, California 95814
Subj: Uniformed Services Retirement Pay and Survivor Benefits Personal Income Tax Exclusion for California
Dear Governor Newsom:
Congratulations on being re-elected as our Governor. Your re-election is testimony of your support for your constituents who include Active Duty Military and Retirees, Surviving Spouses and their families.
Assemblymember Ramos will introduce a bill in the 2023 California legislature to exempt Military Retirees and Surviving Spouses from California Income Tax. Military Retirees have proven years of experience in the Science, Technical, Engineering, and Mathematics (STEM) and Medical occupations. An income tax exclusion would be an incentive for the Military Retirees to remain in California providing California with an available workforce to fill many of the almost 40,000 technical and over 20,000 medical field job postings in California. These job postings include all levels of software engineering, cybersecurity, aerospace, systems engineering, artificial intelligence, biochemistry, physicians, nurses, and management. It is anticipated this workspace will grow by 2% a year. Many Military Retirees, Surviving Spouses and children will use their government educational benefits to pursue advanced degrees in STEM and medical occupations providing a much-needed workforce in California.
According to the Defense Manpower Data Center, Military personnel are projected to enter the civilian workforce in these STEM and Medical occupations.
After 20 years of Military service, servicemembers are eligible for retirement, many in their 40s. Military retirees are highly skilled with experience in management, task prioritization, resource management, attention to detail, team building, and communications. Most importantly many Military retirees have security clearances which is required to work in California’s expanding National Security workspace.
Military retirees pay taxes on their second career earnings which is usually greater than their taxable active duty pay. Instead of losing a taxpayer and family, California would be retaining a taxpayer with increased earnings and the Military Retirees’ family tax revenues.
A state income tax exemption for Military retirees and Surviving Spouses would not only retain and but also attract these highly skilled workers, while exhibiting California’s appreciation for their years of service safeguard our nation.
California is in a unique position in that it can both honor our Military retirees while at the same time enhancing its STEM and medical workforce while bolstering its tax base with higher-earning Military Retirees and Surviving Spouses.
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