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

Plain English Breakdown

The official source material does not provide specific details on how many individuals will qualify for the tax exclusion under this act, leaving it uncertain.

Exclusion of Military Retirement and Survivor Benefits from Personal Income Tax

The bill excludes military retirement pay and survivor benefit payments up to $20,000 per year from personal income tax for certain individuals.

What This Bill Does

• Removes military retirement pay received by qualified taxpayers from their gross income for tax purposes, not exceeding $20,000 annually.
• Excludes annuity payments under the Department of Defense Survivor Benefit Plan from the gross income of qualified taxpayers, up to $20,000 per year.

Who It Names or Affects

• Military retirees receiving retirement pay from the federal government.
• Surviving spouses who receive annuity payments under the Department of Defense Survivor Benefit Plan.

Terms To Know

Qualified taxpayer

A person who meets specific criteria set forth in the bill to receive tax benefits for military retirement or survivor payments.

Uniformed services

Refers to all branches of the U.S. Armed Forces, including the Army, Navy, Air Force, Marine Corps, and Coast Guard.

Limits and Unknowns

• The bill only applies for taxable years starting on or after January 1, 2025, and before January 1, 2035.
• It is unclear how many individuals will qualify for the tax exclusion under this act.

Official Summary Text

SB 1, as amended, Seyarto.
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,
Law, in conformity with federal income tax laws, defines “gross income” as income from whatever source derived, except as specifically excluded, and provides various exclusions from gross income,
including an exclusion for combat-related special compensation.
This bill, for taxable years beginning on or after January 1,
2024,
2025,
and before January 1,
2034,
2035,
would exclude from 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,
2024,
2025,
and before January 1,
2034,
2035,
would also exclude from gross income annuity payments received by a qualified taxpayer, as defined,
during the taxable year, not to exceed $20,000,
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, among other things, specific
goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill also would include additional 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 the report, as provided, and would make taxpayer information received by the Legislative Analyst subject to limitation on the collection and use of that information. 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