HB409: HB409 Income tax; exempt all retirement income received as retirement benefits in the armed forces of the United States or the reserve components

Georgia currently lets people under 62 exclude up to $17,500 of military retirement pay from state income tax, with an extra $17,500 exclusion available only if they also have more than $17,500 in Georgia earned income. HB 409 rewrites that law (O.C.G.A. § 48-7-27) so that all retirement income received as military retirement benefits, whether from active duty service or the reserve components, is exempt from Georgia income tax, with no dollar cap and no age restriction. The bill also updates related language so the exemption still stacks with other income exclusions in Georgia law rather than replacing them. If signed, the change would apply to tax years beginning on or after January 1, 2026, and would take effect once the Governor signs it or it becomes law without a signature.

• Removes the $17,500 cap on the state income tax exclusion for military retirement pay, making the exclusion unlimited.
• Eliminates the requirement that a person be under age 62 to qualify for the exclusion.
• Removes the requirement that a taxpayer have more than $17,500 in Georgia earned income to claim the additional exclusion amount.
• Keeps the rule that this military retirement exclusion stacks with, rather than replaces, other income tax exclusions under Georgia law.
• Sets the change to apply to tax years starting on or after January 1, 2026.

Military retirees living in Georgia who receive retirement pay from the U.S. armed forces or the reserve components, including those age 62 and older who currently cannot claim the exclusion, and those whose retirement income exceeds the current $17,500 or $35,000 caps.

Military retirees in Georgia, especially older retirees and those with larger pensions, would owe less state income tax because their full military retirement pay would no longer count toward taxable income, rather than only a portion up to current dollar limits.

• Section 1 rewrites paragraph (5.1) of O.C.G.A. § 48-7-27(a), replacing the $17,500 age-62 cap with a full exemption for all military retirement income.
• Section 1 removes the prior requirement that a taxpayer have more than $17,500 in Georgia earned income to claim an additional exclusion.
• Section 1 revises subparagraph (C) to clarify the exemption stacks with other income tax exclusions already allowed under Georgia law.
• Section 2 sets the effective date as upon the Governor's approval (or becoming law without approval) and applies it to tax years beginning on or after January 1, 2026.
• Section 3 repeals any conflicting laws.

1. 2025-02-18House Second Readers (House)
2. 2025-02-13House First Readers (House)
3. 2025-02-12House Hopper (House)

• Carl Gilliard (D, HD-162)Primary sponsor
• Derrick Jackson (D, HD-068)
• Angela Moore (D, HD-091)
• Lynn Heffner (D, HD-130)

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