HB361: HB361 Income tax; exempt all retirement income received as retirement benefits in the armed forces of the United States or the reserve components

Under current Georgia law, individuals younger than 62 who receive retirement pay from service in the U.S. armed forces or the reserves can exclude up to $17,500 of that income from state income tax, plus another $17,500 if they have enough other Georgia earned income. This bill rewrites that section of the state's income tax law (O.C.G.A. § 48-7-27) to remove the dollar caps entirely, so all military retirement income received by someone under 62 would be exempt from Georgia income tax. The bill keeps the rule that married couples filing jointly can each claim the exclusion separately for their own retirement income, and it keeps this exclusion separate from other income adjustments in the tax code. The change would take effect July 1, 2025, and would apply to tax years beginning on or after January 1, 2026.

• Removes the current $17,500 cap on the state income tax exclusion for military retirement pay received by people under age 62.
• Removes the additional $17,500 exclusion that previously required the retiree to also have more than $17,500 in other Georgia earned income.
• Makes all military retirement benefit income received by someone under 62 fully exempt from Georgia income tax.
• Keeps the existing rule letting each spouse in a married couple filing jointly claim the exclusion separately for their own retirement income.
• Sets the change to take effect July 1, 2025, applying to tax years starting on or after January 1, 2026.

Georgia residents under age 62 who receive retirement pay from the U.S. armed forces or reserve components, including married couples where one or both spouses qualify. The Georgia Department of Revenue would also be affected through changes to how it calculates taxable income.

Military retirees under 62 currently owe state income tax on military retirement pay above $35,000 in some cases. This bill would eliminate that tax entirely on such income, increasing take-home pay for affected retirees while reducing the state income tax revenue collected from them.

• Section 1 revises paragraph (5.1)(A) of O.C.G.A. § 48-7-27 to exempt all retirement income from military service for individuals under 62, removing the prior $17,500 and additional $17,500 caps.
• Section 1 keeps paragraph (5.1)(B), which allows each spouse in a jointly filing married couple to individually claim the exclusion for their own qualifying retirement income.
• Section 1 retains paragraph (5.1)(C), clarifying the exclusion is separate from and does not affect other income adjustments elsewhere in the tax code.
• Section 2 sets the effective date as July 1, 2025, applying to taxable years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws.

1. 2025-02-12House Second Readers (House)
2. 2025-02-11House First Readers (House)
3. 2025-02-10House Hopper (House)

• Bethany Ballard (R, HD-147)Primary sponsor
• Josh Bonner (R, HD-073)
• David Clark (R, HD-100)
• Carmen Rice (R, HD-139)
• Teddy Reese (D, HD-140)
• Shaw Blackmon (R, HD-146)

• military retirement pay
• income tax exemptions
• veterans benefits
• Georgia tax law