A group of Georgia lawmakers want to exempt retirement income received as retirement benefits from military service from state income taxation.
Representatives Dave Belton, Bill Hitchens, Lee Hawkins, Clay Pirkle, Penny Houston, and Robert Dickey – all Republicans – are backing House Bill 33.
Specifically, the bill would:
- Apply to persons under the age of 62 who are collecting retirement benefits from the U.S. armed forces or reserves;
- If the retirement income is less than $3,000.
If the retirement income exceeds $3,000, then:
- For the 2021 tax year, up to $5,900 would not be taxed,
- For the 2022 tax year, up to $8,800 would not be taxed,
- For the 2023 tax year, up to $11,700 would not be taxed,
- For the 2024 tax year, up to $14,600 would not be taxed,
- And any tax year 2025 and after would be cap at $17,500.
Additionally, married couples, if otherwise qualified for an exclusion, each individual would be entitled to exclude retirement income received by that spouse up to the exclusion amount.
If approved, the bill would take effect in July 2021 and apply to all tax years after 2021.
Georgia law already permits a state income tax exemption for military income received by a member of the National Guard or any reserve component of the armed services of the United States stationed in a combat zone or stationed in defense of the borders of the United States pursuant to military orders. You can see the dozens of other exemptions under the state income tax code here.
Republicans filed House Bill 7 in 2019 to run from tax years 2020 to 2030, but the bill failed to gain final passage despite having the backing of Representatives Shaw Blackmon, Dave Belton, Bill Hitchens, Heath Clark, and Jesse Petrea. At the time, Rep. Mike Glanton was the only Democrat to sign on the measure.
At the time, Ryan Graham, Chairman of the Libertarian Party of Georgia criticized HB 7, saying:
“While we applaud the attempt to allow SOME Georgians to keep the full value of their hard-earned retirement, we cannot support the bill. If the sponsor recognizes the harm done by income taxes, we encourage him to put forth a bill eliminating the state income tax, protecting all Georgians from those harms, not just a chosen few.”
The 2021 version of the initiative has been assigned to the House Ways & Means Committee.
Lawmakers have until the 28th legislative day of session to pass legislation out of their respective chambers and on to the opposite legislative body in order for the bill to have an opportunity to become law this year.
You can read the bill here.
