Chair’s bill to exempt military retirement pay from state tax moves out of committee

The committee chair presented SB 1407, saying the bill is intended to keep veterans and retired military personnel in California by exempting military retirement pay and surviving spouse benefits from state income tax.

"It will exempt a veteran's military retirement pay as well as a surviving spouse's benefit payment from state taxes," the chair said, framing the measure as workforce development and retention policy. Testimony emphasized that other states offer similar exemptions and that California has lost retirees to other states.

Tom D'Agostino, representing co‑sponsors including the San Diego Military Advisory Council and veteran service organizations, urged support and noted that a number of states do not tax retirement pay. Multiple veterans groups and labor organizations voiced support during the hearing; no witnesses in opposition appeared on the floor record.

The committee voted to pass SB 1407 to appropriations. Chair remarks and supporting testimony emphasized budget and workforce implications, and the bill will undergo fiscal analysis in appropriations.

Why it matters: Supporters argue taxation of retirement pay discourages retired service members from settling in California and that an exemption would help retain a skilled workforce and associated local economic activity.

Next: Referred to appropriations for fiscal analysis and potential amendments.