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

Assembly Members Ramos and Pacheco propose excluding military retirement pay and survivor benefits from California state income tax, introducing targeted relief for service members and their families through the Military Services Retirement and Surviving Spouse Benefit Payment Act.

The legislation creates two five-year tax exclusions starting January 1, 2025. Military retirees may exclude up to $20,000 in federal retirement pay from their state taxable income, while survivors receiving Department of Defense Survivor Benefit Plan annuities may exclude up to $20,000 of those payments. These exclusions apply to joint filers with adjusted gross incomes under $250,000 and individual filers under $125,000. The provisions cover retirement pay from all uniformed services, including the Armed Forces, National Guard, Public Health Service, and National Oceanic and Atmospheric Administration Commissioned Officer Corps.

The bill's findings note that approximately 60,000 high-tech jobs remain unfilled in California, while military retirees often possess technical and management expertise valuable to employers. Authors assert the tax exclusions would help retain skilled veterans in California while bringing federal retirement and veterans' benefit funds into local economies. Both exclusions contain sunset provisions, automatically repealing on December 1, 2030 unless extended by future legislation.