HB 409: 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, only some military retirees get a tax break on their retirement pay, and it is limited: people under 62 can exclude up to $17,500 of that income, plus an extra amount if their other Georgia earnings exceed $17,500. This bill rewrites that section of Georgia's income tax law (O.C.G.A. § 48-7-27) so that all retirement income from service in the U.S. armed forces or the reserve components is exempt from state income tax, with no dollar cap and no age requirement. The bill also removes a separate rule that let each spouse in a married couple filing jointly claim their own exclusion amount, since the new full exemption makes that provision unnecessary. If signed into law, the change would apply to tax years beginning on or after January 1, 2026.

• Removes the current $17,500 cap (and the added amount tied to outside earnings) on how much military retirement income is exempt from Georgia income tax.
• Eliminates the requirement that a retiree be under age 62 to qualify for the exclusion.
• Makes all retirement income from service in the armed forces or reserve components fully exempt from Georgia state income tax.
• Repeals the separate rule allowing each spouse in a joint return to claim an individual exclusion, since the new exemption already covers all such income.
• Sets the change to apply to tax years beginning on or after January 1, 2026, once the Governor signs it or it becomes law without signature.

Military retirees living in Georgia who receive retirement pay from the armed forces or reserve components, including those over 62 who were previously excluded from the tax break, and married couples who file joint state tax returns.

Veterans and reservists who retired from military service would owe no Georgia income tax on that retirement pay, regardless of age or how much they earn from other work, which could meaningfully lower their state tax bills starting with the 2026 tax year.

• Section 1 revises paragraph (5.1)(A) of O.C.G.A. § 48-7-27 to exempt all military retirement income instead of capping the exclusion at $17,500 plus an age-based add-on.
• Section 1 removes the former age-62 restriction that limited the base exclusion to younger retirees.
• Section 1 repeals the provision letting each spouse in a joint filing separately claim the exclusion, since the exemption now covers all qualifying income for the household.
• Section 2 sets the effective date as approval by the Governor (or becoming law without approval) and applies the change 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)

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