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California Lawmakers Propose Bill to Exempt Military Pensions from State Taxes, Supporting Veterans’ Financial Security

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California Considers Exempting Military Retirees from State Income Taxes


California is home to the largest number of active-duty military personnel and veterans in the nation. However, many retirees are leaving the state when they retire from the armed forces.

Retirement Income and Taxes

Retired Brigadier Gen. Dan Pemberton, who served in the U.S. Air Force and Air National Guard for 24 years, states that military retirement is a substantial portion of his retirement income. However, like any income in California, military pensions are taxed.

Proposed Bill to Exempt Military Retirees from State Income Taxes

A state Assembly bill, AB46, aims to exempt retirees and their surviving spouses from paying state income taxes on military pensions for the next decade. This bill is currently working its way through the California Legislature.

Support for the Bill

Mike McNerney, director of Vets In Tech and a former Air Force captain, supports the bill. McNerney believes that veterans, who have served the country in dangerous environments, deserve to be given back to. He states that California supplies the most active-duty service members but ranks low in terms of veterans choosing to make California their home after retirement.

Benefits of Exempting Military Pensions from Taxes

McNerney argues that exempting military pensions from taxes would encourage retirees to settle in California, which would have economic benefits. It is estimated that reversing this tax would increase veterans’ incomes by over $830 million per year and create over 12,000 additional jobs for veterans and military families in the state.

Personal Impact and Plans

Retired Brigadier Gen. Dan Pemberton plans to use the extra money from the tax exemption to help his grandkids with college expenses.

Status of the Bill

The bill, AB46, is currently in the Senate Appropriations Committee and is scheduled to be voted on this Friday. If it passes out of committee, it will then be voted on by the entire California state Senate. Finally, it will go to Gov. Gavin Newsom for potential signing into law.

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