Personal income taxes: exclusion: Military Services Retirement and Surviving Spouse Benefit Payment Act.

Plain English Breakdown

The effective date of the bill's provisions was corrected based on the official summary text.

Tax Exclusion for Military Retirement and Survivor Benefits

AB-53 excludes certain military retirement pay and survivor benefits from personal income taxes in California starting January 1, 2027.

What This Bill Does

• Excludes up to $20,000 of military retirement pay received by veterans who served in the uniformed services from their taxable income starting January 1, 2027.
• Also excludes up to $20,000 of survivor benefit payments made under a Department of Defense Survivor Benefit Plan for surviving spouses or dependents of military members from their taxable income starting January 1, 2027.
• Requires the Franchise Tax Board and the Department of Veterans Affairs to provide data requested by the Legislative Analyst for reporting purposes.

Who It Names or Affects

• Veterans receiving military retirement pay from the federal government.
• Surviving spouses and dependents of military members who receive survivor benefit payments under a Department of Defense Survivor Benefit Plan.

Terms To Know

Taxable income

The amount of money that is subject to personal income tax after certain exclusions are applied.

Uniformed services

Refers to the U.S. military branches and other federal uniformed service organizations.

Limits and Unknowns

• The exclusion applies only for taxable years starting on or after January 1, 2027.
• It is unclear how many veterans and surviving spouses will benefit from this tax exclusion.

Official Summary Text

AB 53, as amended, Ramos.
Personal income taxes: exclusion: Military Services Retirement and Surviving Spouse Benefit Payment Act.
The Personal Income Tax
Law imposes a tax on individual taxpayers measured by the taxpayer’s taxable income for the taxable year, but excludes certain items of income from the computation of tax, including an exclusion for combat-related special compensation.
Law, in modified conformity with federal income tax law, generally defines “gross income” as income from whatever source derived, except as specifically excluded, including an exclusion for combat-related special compensation.
This bill, for taxable years beginning on or after January 1,
2027,
2025,
and before January 1,
2037,
2030,
would exclude from
taxable
gross
income retirement pay received by a
taxpayer
qualified taxpayer, as defined, during the taxable year, not to exceed $20,000,
from the federal government for service performed in the uniformed services, as
defined, during the taxable year.
defined.
The bill, for taxable years beginning on or after January 1,
2027,
2025,
and before January 1,
2037,
2030,
would also exclude from
taxable
gross
income annuity payments received
during the taxable year, not to exceed $20,000,
by a qualified taxpayer, as defined, pursuant to a United States
Department of Defense Survivor Benefit
Plan during the taxable year.
Plan.
The bill would make related findings and declarations.
Existing law requires any bill authorizing a new tax expenditure to contain specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements, as provided.
This bill also would include the information required for any bill authorizing a new tax expenditure.
The bill would require the Franchise Tax Board and the Department of Veterans Affairs to provide any data requested by the Legislative Analyst to write a report, as provided, and would make taxpayer information received by the Legislative Analyst subject to a limitation, a violation of which is a crime, on that information’s collection and use. By expanding the scope of a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would take effect immediately as a tax levy.

Current Bill Text

Download Bill PDF