Lawmaker proposes tax exemption on military retirement income

A Warner Robins state representative says it’s time for Georgia to exempt military retirement income from state income taxes.

State Rep. Heath Clark said the tax treatment would make Georgia attractive for skilled, dedicated men and women who retire from the military as young as 38 years old and looking for a second-act civilian career.

“If they stick around or we can bring other people from other bases in ... the mission capabilities that are at our defense installations, you could increase those because you have the workforce in place to increase the workload,” said Clark, a Republican.

It would apply to military retirees of all ages, but all retirees ages 65 and older can already shield up to $65,000 in pension or investment income from annual Georgia income taxes.

Clark said he also wants to honor the service and sacrifices of service members and their families.

“These are men and women who have given up the prime years of their working career and made far under market value by putting on the uniform,” he said.

His bill might cost the state budget something like $100 million annually, based on calculations on similar bills from other years. It’s too early for him to have an official state estimate on his bill.

State Rep. Jay Powell, R-Camilla, who chairs the powerful tax-writing Ways and Means Committee, said he has mixed feelings about the bill.

He said it could be helpful to recognize the value of the dedication and skills that those younger retirees would bring to civilian jobs and to Georgia.

On the other side, though, it “might be a little bit heavy for the state of Georgia financially,” Powell said.

The chairman said he might be open to some kind of tiered system — maybe an exemption that increases with the retiree’s age, or an exemption that kicks in only if the retiree does indeed take up a civilian job.

More than half the states offer a full or partial military pension income tax exclusion, and some are done by tiers, according to a tally of 2014 laws by the nonpartisan National Conference of State Legislatures. Alabama offers a full exclusion. Florida and Tennessee charge no state income tax at all.

Asked how the state budget could make up for $100 million less in taxes, Clark said “the economy is growing.”

And he made an economic impact argument: keeping skilled staff working as civilians in and around Georgia’s bases would help the state’s installations attract new missions.

It’s too late this legislative year for any serious activity on House Bill 599. Clark said he’s open to amendments, but he wanted to start by proposing a straight exemption and beginning conversations ahead of January 2018, when the next legislative session starts.

This story was originally published March 20, 2017 at 3:41 PM with the headline "Lawmaker proposes tax exemption on military retirement income."