A Georgia lawmaker is reconsidering refiling a proposal that would make military retirement and survivor benefits tax exempt.
Sen. Zahra Karinshak, D–Duluth, sent the bill, originally filed in the 2019 legislative session, to the Department of Audit and Accounts for review late last month.
Fiscal researchers said the bill could result in $80.5 million to $131.5 million in state revenue loss in 2020, which includes retroactive pay from Jan. 1, 2019. That amount would continue to grow and could be as high as $117.9 million in 2025.
In fiscal year 2018, the U.S. Department of Defense paid about $59 billion to 2.3 million military retirees and survivors across the nation.
Retirement income for armed service personnel is based on seniority, rank, base pay at retirement and cost-of-living-adjustments, according to the Congressional Research Service.
U.S. Armed Forces members become eligible for retirement after 20 years of service. According to the Department of Defense, 91,262 retired military personnel in Georgia received retirement benefits in fiscal year 2018. About 55 percent of those retirees were 62 or older and already are subject to a tax exclusion.
All Georgia taxpayers 62 or older, or those who are disabled, qualify for up to a $35,000 tax exclusion on their retirement income. At 65 and older, the threshold is raised to $65,000.
The annual average military pension for retirees under 65 is $26,282, according to Georgia State University's Fiscal Research Center. Those over 65 receive an average of $27,668.
Survivors of veterans and military beneficiaries received an average of $12,178 to $9,828 in fiscal year 2018, depending on age. However, revenue projections for survivor benefits exclude those disbursed by the Department of Veteran Affairs because they already are tax exempt.
Starting at 10 percent at 50 years old, the exemption will increase by 10 percent per year in age until 59 years old. For instance, retirees who are 51 will get a 20 percent exemption, 52-year-olds will receive 30 percent and so on. Retirees who are 59 and older will get a full exemption – or 100 percent.