By MOAA Staff

MOAA National serves in an advisory capacity for state-specific issues such as income tax exemption and state-level education benefits. Please contact your local MOAA council as state legislation must originate at the state level.  

Plans to reintroduce legislation exempting some or all uniformed services retirement pay and survivor benefits from state taxes are in place in two states where summer deadlines passed without bills reaching the governor’s desk. Here’s a look at the latest from California and Delaware, plus some details on other states where work on an exemption will continue, thanks in part to efforts from MOAA members and affiliates.

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

California

AB 46, a state assembly bill which would have exempted all uniformed services retirement pay and survivor benefits from state taxation, will not become law this session despite clearing several legislative hurdles and never receiving a “nay” vote since its May 2023 introduction.

This California Assembly passed the bill by a 77-0 margin that month, then two Senate committees unanimously moved it forward before it was placed in the state’s “suspense file,” where the Senate Appropriations Committee sends legislation costing more than $150,000 for further consideration (without further testimony). The bill was held over by the committee in 2023 but was not moved forward by the committee in its Aug. 15 session this year.

The bill was supported not only by the California Council of Chapters of MOAA (CALMOAA), but also by state-level affiliates of the American Legion and the Marine Corps League, as well as the California State Veterans Commanders Council and nonmilitary advocacy groups. 

Efforts to secure the support of Gov. Gavin Newsom have been unsuccessful; Lt. Cmdr. Jeff Breiten, USN (Ret), CALMOAA vice president of legislative affairs, said the governor “has sat silently on the sidelines failing to support any legislation that was introduced each of those five years that would have provided an exemption on military retirement pay.”

Breiten, citing DoD’s Office of the Actuary, said California’s military retiree population declined for the 11th straight year in 2023.

Legislators have expressed interest in introducing a bill for the 2025 session, Breiten told MOAA. Talks will continue with lawmakers as advocates work to craft a bill that will carry the governor’s support.

[RELATED: These Tax Rules Will Expire in 2025]

Delaware

Legislation that would have partially exempted uniformed service retirement pay and survivor benefits from state taxes did not advance out of committee in the Senate before the June 30 end of the state legislative session. 

SB 201 would have increased existing maximum exemptions to $15,000 for the 2024 tax year, $20,000 in 2025, and $25,000 in 2026 and thereafter. The bill was amended to include Coast Guard, U.S. Public Health Service, and NOAA members.

MOAA’s Dover Chapter “will continue to ‘drive on to the Ranger objective’” with the tax legislation next session, said Col. Eugenia “Gene” Thornton, USA (Ret), Dover Chapter president.

Thornton highlighted the chapter’s support of other pro-veteran legislation that did become law, such as bills that updated military-related state laws to include Space Force members; offer children of servicemembers priority in school enrollment; reduce wait times for interment at state veterans cemeteries; and allow the state to accept “concurrent jurisdiction over juvenile matters on military installations,” which could allow some juvenile cases to be resolved in the state’s Family Court instead of federal courts.

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Other States

MOAA members and affiliates nationwide remain active in states where at least a portion of uniformed services retirement pay and/or survivor benefits are subject to taxes:

• Virginia: The state operates on a two-year budget cycle. The 2023 budget included an exemption of $20,000 for the 2023 tax year, which moves to $30,000 in 2024 and $40,000 in 2025 and beyond. MOAA members in the state are still advocating for U.S. Public Health Service and NOAA retirees to receive the benefit and legislation could be introduced in January, said Col. Monti Zimmerman, USA (Ret), vice president of legislative affairs for MOAA’s Virginia Council of Chapters. Learn more about the Virginia Council of Chapters’ advocacy work at this link.
  
  
• Maryland: Bills that would have phased in a full exemption for retired pay by tax year 2026 did not clear the state legislature in 2024. The full exemption remains a top priority for MOAA’s Maryland Council of Chapters.
  
  
• Oregon: Legislation supported by MOAA’s Oregon State Council of Chapters introduced in February would’ve exempted up to $17,500 in military retirement pay, but it did not move forward in a short (35-day) session. The 2025 session may last up to 160 days.