(1)Existing law requires the Wildlife Conservation Board to establish and administer, through the Department of Fish and Wildlife, the California Riparian Habitat Conservation Program with the purpose and goal of protecting, preserving, and restoring riparian habitats throughout the state, as specified. Existing law authorizes the board to authorize the department to award grants and loans for the purposes of the program to specified entities.

This bill would authorize the board to authorize the department to make those awards to federally recognized tribes.

(2)Existing law establishes the Inland Wetlands Conservation Program under the board with the purpose and goal of carrying out the programs of the Central Valley Habitat Joint Venture. Existing law authorizes the board to make grants or loans for the purpose of wetland and associated upland habitat acquisition, restoration, or enhancement to specified entities.

This bill would authorize the board to make those grants or loans to federally recognized tribes.

(3)Existing law authorizes the department to enter into contracts or other agreements with nonprofit conservation groups or resource conservation districts for the management and operation of department-managed lands.

This bill would authorize the department to also enter into those contracts or other agreements with federally recognized tribes.

The Personal Income Tax Law imposes a tax on individual taxpayers measured by the taxpayers taxable income for the taxable year, but excludes certain items of income from the computation of tax, including an exclusion for combat-related special compensation. Law, in modified conformity with federal income tax law, generally defines gross income as income from whatever source derived, except as specifically excluded, including an exclusion for combat-related special compensation.

This bill, for taxable years beginning on or after January 1, 2027, 2025, and before January 1, 2037, 2030, would exclude from taxable gross income retirement pay received by a taxpayer qualified taxpayer, as defined, during the taxable year, not to exceed $20,000, from the federal government for service performed in the uniformed services, as defined, during the taxable year. defined. The bill, for taxable years beginning on or after January 1, 2027, 2025, and before January 1, 2037, 2030, would also exclude from taxable gross income annuity payments received during the taxable year, not to exceed $20,000, by a qualified taxpayer, as defined, pursuant to a United States Department of Defense Survivor Benefit Plan during the taxable year. Plan. The bill would make related findings and declarations.

Existing law requires any bill authorizing a new tax expenditure to contain specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill also would include the information required for any bill authorizing a new tax expenditure. The bill would require the Franchise Tax Board and the Department of Veterans Affairs to provide any data requested by the Legislative Analyst to write a report, as provided, and would make taxpayer information received by the Legislative Analyst subject to a limitation, a violation of which is a crime, on that informations collection and use. By expanding the scope of a crime, this bill would impose a state-mandated local program.

This bill would take effect immediately as a tax levy.

The Personal Income Tax Law imposes a tax on individual taxpayers measured by the taxpayers taxable income for the taxable year, but excludes certain items of income from the computation of tax, including an exclusion for combat-related special compensation.

This bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2037, would exclude from taxable income retirement pay received by a taxpayer from the federal government for service performed in the uniformed services, as defined, during the taxable year. The bill, for taxable years beginning on or after January 1, 2027, and before January 1, 2037, would also exclude from taxable income annuity payments received by a qualified taxpayer, as defined, pursuant to a United States Department of Defense Survivor Benefit Plan during the taxable year. The bill would make related findings and declarations.

Existing law requires any bill authorizing a new tax expenditure to contain specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements, as provided.

This bill also would include the information required for any bill authorizing a new tax expenditure. The bill would require the Franchise Tax Board and the Department of Veterans Affairs to provide any data requested by the Legislative Analyst to write a report, as provided, and would make taxpayer information received by the Legislative Analyst subject to a limitation, a violation of which is a crime, on that informations collection and use. By expanding the scope of a crime, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

This bill would take effect immediately as a tax levy.

SENATE COMMITTEE ON

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

AB 53 (Ramos) - Native American tribes: fish and wildlife: conservation and mitigation lands

Bill Summary:

This bill would make federally recognized tribes eligible recipients of grants and awards or grants and loans from the Wildlife Conservation Board’s California Riparian Habitat Conservation Program and Inlands Wetlands Conservation Program, respectively; and would authorize federally-recognized tribes to enter into contracts or agreements with the California Department of Fish and Wildlife (CDFW) to manage and operate certain lands, among other things.

Fiscal Impact:

• Cost pressures of an unknown but potentially significant amount (various funds) due to expanded CDFW and WCB grant, loan, and award eligibility.

Background:

California Native American tribes. As of 2024, there were approximately 110 federally recognized tribes in California and 78 entities petitioning for recognition. Federally recognized tribes have a unique government-to-government relationship with local, state, and federal entities, and are sovereign nations. Federally recognized tribes can create their own laws, governmental structure, and enrollment or membership rules for their land and citizens of their nation.

The Wildlife Conservation Board (WCB) is a state grant-making agency established within the department in 1947 whose mission is to protect, restore, and enhance the state’s “spectacular natural resources for wildlife and for the public’s use and enjoyment in partnership with conservation groups, government agencies and the people of California.” The WCB currently administers nearly 20 programs that support projects statewide, including, among others, the California Riparian Habitat Conservation Program (CRHCP) and the Inland Wetlands Conservation Program (IWCP). The former has the purpose and goal of protecting, preserving, and restoring riparian habitats throughout the state, and the latter has the purpose and goal of carrying out the programs of the Central Valley Habitat Joint Venture.

CNRA’s 2026 California Tribal Stewardship Policy. In 2026 CNRA released the California Tribal Stewardship Policy (Policy) which builds upon earlier efforts to establish a framework for CNRA’s interaction with California Native American tribes. It “sets forth a vision for a new era of tribal-state partnerships in the spirit of truth and healing. This Policy recognizes tribes’ role as the original stewards of lands and waters in California and seeks to institutionalize practices of tribal stewardship in the implementation of [CNRA]’s missions, regulations, policies, and programs…” Elements of the Policy include ancestral land return, collaboration, and tribal access built upon respectful and durable agreements. The long-term goals of the Policy include to expand tribal stewardship to at least 7.5 million acres of land and coastal waters.

Recent executive orders (B-10-11 (2011), N-15-19 (2019), and N-82-20 (2020)) established the Tribal Advisor position in the Governor’s Office, directed state agencies to communicate and consult with California Native American tribes to provide opportunities for meaningful input on the development of matters affecting tribal communities, apologized for the role of the state in committing historical wrongs and establishing a Truth and Healing Council, and directed CNRA to work with tribes in advancing the state’s nature-based solutions priorities. In addition, Governor Newsom’s Statement of Administrative Policy on Native American Lands directed all departments to identify opportunities for increased tribal access, co-management, and ancestral land return. According to the CNRA, several departments have already returned state owned lands including the department, the State Lands Commission, and the Coachella Valley Mountains Conservancy. Grants from the WCB have facilitated these efforts.

Proposed Law:

This bill would:

1. Add federally recognized tribes to eligible recipients of:
   1. Awards and grants from the WCB’s California Riparian Habitat Conservation Program
   2. Grants and loans from the WCB’s Inland Wetlands Conservation Program.
2. Add federally recognized tribes to those entities CDFW can enter into contracts or other agreements with for the management and operation of department-managed lands.
3. Declare that it is the intent of the Legislature to enact subsequent legislation that would develop a faster public process for the Department of Fish and Wildlife to return lands that meet certain criteria to federally recognized tribes.
4. Make minor and technical changes.

Related Legislation:

AB 900 (Papan, Chapter 385, Statutes of 2025) requires CNRA to prepare a section on stewardship for the 2027 annual report on 30x30 goals in collaboration with stakeholders, California Native American tribes, and state agencies, including with recommendation for increasing tribal stewardship of conservation lands and increasing ancestral land return, as provided.

AB 1284 (Ramos, Chapter 657, Statutes of 2024) encourages CNRA and its departments to enter into meaningful co-management and co-governance agreements for the management of natural resources.

AB 379 (Gallager, Chapter 701, Statutes of 2021) makes California Native American tribes eligible for many WCB programs, among other provisions.

-- END --

SENATE COMMITTEE ON NATURAL RESOURCES AND WATER

Senator Josh Becker, Chair

2025 - 2026 Regular

Bill No: AB Hearing Date: July 1, 2026

Subject: Native American tribes: fish and wildlife: conservation and mitigation lands

SUMMARY

This bill would make federally recognized tribes eligible recipients of grant and awards or grants and loans from the Wildlife Conservation Board’s California Riparian Habitat Conservation Program and Inlands Wetlands Conservation Program, respectively; authorize federally-recognized tribes to enter into contracts or agreements with the California Department of Fish and Wildlife to manage and operate certain lands; and authorize the sale or transmittal of conservation lands to federally recognized tribes in certain circumstances, as provided.

BACKGROUND AND EXISTING LAW

The California Department of Fish and Wildlife (department).

The department is the state’s trustee agency for the state’s fish and wildlife. The department’s mission statement is “to manage California’s diverse fish, wildlife, and plant resources, and the habitats upon which they depend, for their ecological values and for their use and enjoyment by the public.”

The Wildlife Conservation Board (WCB).

The WCB is a state grant-making agency established within the department in 1947 whose mission is to protect, restore, and enhance the state’s “spectacular natural resources for wildlife and for the public’s use and enjoyment in partnership with conservation groups, government agencies and the people of California.” The WCB currently administers nearly 20 programs that support projects statewide, including, among others, the California Riparian Habitat Conservation Program (CRHCP) and the Inland Wetlands Conservation Program (IWCP). The former has the purpose and goal of protecting, preserving, and restoring riparian habitats throughout the state, and the latter has the purpose and goal of carrying out the programs of the Central Valley Habitat Joint Venture.

Department-managed lands. According to the department, it is responsible for management of over 1.1 million acres of fish and wildlife habitat spanning over 700 properties statewide. These properties provide habitat for a rich diversity of fish, wildlife, and plant species and comprise habitats from every major ecosystem in the state. Most of these properties may be used by the public for consumptive (i.e. hunting) and/or nonconsumptive (e.g. wildlife viewing) recreational purposes. The department is authorized to enter into contracts or agreements with nonprofit conservation organizations and certain other entities to manage and operate department-managed lands.

Acquisition of conservation lands. Multiple state entities, both within the California Natural Resources Agency (CNRA) and without, including the department, are authorized to acquire lands for the purposes of conservation. Once acquired, the conservation lands generally cannot be sold with limited exception. However, the sale or transfer to other public entities or nonprofit organizations is allowed to improve conservation management, public access, historic preservation, or to protect or enhance the biological value of conservation lands.

California Native American tribes

As of 2024, there were approximately 110 federally recognized tribes in California and 78 entities petitioning for recognition. Federally recognized tribes have a unique government-to-government relationship with local, state, and federal entities, and are sovereign nations. Federally recognized tribes can create their own laws, governmental structure, and enrollment or membership rules for their land and citizens of their nation.

CNRA’s 2026 California Tribal Stewardship Policy.

In 2026 CNRA released the California Tribal Stewardship Policy (Policy) which builds upon earlier efforts to establish a framework for CNRA’s interaction with California Native American tribes. It “sets forth a vision for a new era of tribal-state partnerships in the spirit of truth and healing. This Policy recognizes tribes’ role as the original stewards of lands and waters in California and seeks to institutionalize practices of tribal stewardship in the implementation of [CNRA]’s missions, regulations, policies, and programs…” Elements of the Policy include ancestral land return, collaboration, and tribal access built upon respectful and durable agreements. The long-term goals of the Policy include to expand tribal stewardship to at least 7.5 million acres of land and coastal waters.

Recent executive orders (B-10-11 (2011), N-15-19 (2019), and N-82-20 (2020)) established the Tribal Advisor position in the Governor’s Office, directed state agencies to communicate and consult with California Native American tribes to provide opportunities for meaningful input on the development of matters affecting tribal communities, apologized for the role of the state in committing historical wrongs and establishing a Truth and Healing Council, and directed CNRA to work with tribes in advancing the state’s nature-based solutions priorities. In addition, Governor Newsom’s Statement of Administrative Policy on Native American Lands directed all departments to identify opportunities for increased tribal access, co-management, and ancestral land return. According to the CNRA, several departments have already returned state owned lands including the department, the State Lands Commission, and the Coachella Valley Mountains Conservancy. Grants from the WCB have facilitated these efforts.

There have also been multiple legislative efforts to facilitate land transfers to California Native American tribes (for example, the no-cost transfer of Blues Beach to Kai Poma (SB 231, McGuire, Chapter 289, Statutes of 2021)) or to specify that California Native American tribes are eligible to participate in certain grant or loan programs (AB 379, Gallagher, Chapter 701, Statutes of 2021), among others.

Existing law:

1. Establishes the WCB and the department at CNRA.
2. Establishes the CRHCP at the WCB. (Fish and Game Code (FGC) §§1385 et seq.)
   1. Provides the CRHCP’s purpose and goal is to protect, preserve, and restore riparian habitats throughout the state by the acquisition of interests and rights in real property and waters, as specified.
   2. Authorizes the WCB to authorize the department to award grants and loans to local public agencies, state agencies, federal agencies, a nonprofit organization for the purposes of the CRHCP.
3. Establishes the IWCP at the WCB. (FGC §§1400 et seq.)
   1. Provides the IWCP’s purpose and goal is to carry out the programs of the Central Valley Habitat Joint Venture.
   2. Authorizes the WCB to make grants or loans to nonprofit organization, local government agencies, and state departments and agencies for the purpose of wetland and associated upland habitat acquisition, restoration, or enhancement, as provided.
4. Authorizes the department to enter into contracts of other agreements for the management and operation of department-managed lands with nonprofit conservation groups or resource conservation districts. (FGC §1745)
5. Prohibits the sale or the transfer of possession and control of conservation lands to another agency with limited exception including the sale or transfer to other public agencies or nonprofit organizations to improve conservation management, public access, historic preservation or to protect or enhance the biological value of the conservation lands. (Public Resources Code §5096.516)

PROPOSED LAW

This bill would:

1. Add federally recognized tribes to eligible recipients of:
   1. Awards and grants from the WCB’s California Riparian Habitat Conservation Program
   2. Grants and loans from the WCB’s Inland Wetlands Conservation Program.
2. Add federally recognized tribes to those entities the department can enter into contracts or other agreements with for the management and operation of department-managed lands.
3. Add federally recognized tribes to those entities that conservation lands can be sold or transferred to in order to improve conservation management, public access, historic preservation, or to protect or enhance the biological value of conservation lands, as provided.
4. Make minor and technical changes.

ARGUMENTS IN SUPPORT

According to the author, “California tribes have been the original stewards of these lands and carried forward thousands of years of traditional knowledge and land management practices. As the state confronts ever-increasing risks from climate change, we must call upon every available resource to meet the challenge. Yet, under current law, California is not calling upon the centuries of accumulated knowledge that federally recognized tribes have to offer for ecological restoration.”

“AB 53 would remedy this by authorizing federally recognized tribes to receive grants and loans through important programs for stewardship offered through the Wildlife Conservation Board. It would also permit the Department of Fish and Wildlife to sell or transfer lands to federally recognized tribes to ensure the state fulfills its promise to healing and reconciliation with California’s First People.”

The Karuk Tribe writes, “For generations, Tribes across California have maintained reciprocal relationships with the lands and water under our care. Tribal stewardship practices, including cultural burning, fisheries management, meadow enhancement, and watershed protection, have sustained healthy ecosystems across California for thousands of years. Today, many of the environmental challenges facing our state – including catastrophic wildlife, declining biodiversity, degraded watersheds, and the collapse of salmon populations – reflect the reduction of Indigenous stewardship and Indigenous leadership in the management of these landscapes.”

ARGUMENTS IN OPPOSITION

Taking an “oppose unless amended” position, Supervisor Howard writes “Del Norte County recognizes and deeply values the cultural, historical, and governmental relationship that California Native American tribes maintain with their ancestral lands. The County has longstanding government-to-government relationships with local tribal governments, including the Tolowa Dee-ni’ Nation, Elk Valley Rancheria, and Yurok Tribe, and supports collaborate approaches to ecological restoration, habitat conservation, responsible resource management, and tribal stewardship.”

“AB 53 expands the existing exemption under the Public Resources Code Section 5096.516 to allow conservation lands to be transferred to federally recognized tribes without the public hearing and legislative authorization process that would otherwise apply to such transfers. I am concerned that this change would remove important public transparency and local input mechanisms for decisions involving conservation lands located within county boundaries.”

The Supervisor further raises concerns about “the legal and practical implications that may arise if conservation lands are later proposed for federal trust status as the conversion may substantially alter the jurisdictional framework governing the property and may affect the applicability of certain state regulatory requirements. AB 53 does not address how existing conservation obligations, public access protections, or other long-term management commitments would be preserved and enforced under those circumstances.”

“Similarly, management agreements, conservation easements, and other contractual arrangements involving federally recognized tribes may involve unique legal considerations related to tribal sovereign immunity, federal approval requirements, enforceability, and available remedies. These issues do not diminish the value of tribal stewardship, but they warrant careful consideration to ensure that conservation objectives, public investments, and long-term obligations remain adequately protected.”

COMMENTS

WCB already contracts with federally recognized tribes. According to the department, grants between the WCB and a federally recognized tribe include a limited waiver of sovereign immunity that would allow the WCB to legally enforce the terms of the grant agreement against a tribe, if necessary. WCB grant agreements also include a notice provision and opportunity to cure in the event there is a default or breach. Additionally, several WCB programs already explicitly include federally recognized tribes as eligible recipients.

In addition, the WCB has already participated in at least one transfer of land to a federally recognized tribe – the Mt. Whitney Fish Hatchery to the Fort Independence Indian Community of Paiute Indians of the Fort Independence Reservation. In the contract, the Tribe agreed to provide a limited waiver of sovereign immunity for certain provisions and agreed to maintain the hatchery and preserve the open space character of the property, among other commitments. The WCB can transfer land to a federally recognized tribe without this bill.

Concerns raised. The Committee received multiple letters of concern from a retired judge, the California Farm Bureau, the State Parks Foundation and the Endangered Habitats League echoing the concerns raised in opposition to the bill regarding the proposed land transfer language. While all fully supported the intent of the bill, all indicated that transfers without a full consideration of the potential implications of the transfers for existing agreements and stakeholders was problematic. This language was a late gut-and-amend and many of the issues raised are beyond this Committee’s jurisdiction and perhaps better suited to the discussion and iteration afforded to a 2-year bill.

The Committee may wish to amend the bill to remove the land transfer language and replace it with legislative intent language to provide an opportunity for the author to develop language that addresses the concerns raised in the time remaining in the session. [Amendment #1]

Of note, the Gallagher bill cited above included identical language which was struck from the bill for the same reasons five years ago.

Recent related legislation

AB 900 (Papan, Chapter 385, Statutes of 2025) requires CNRA to prepare a section on stewardship for the 2027 annual report on 30x30 goals in collaboration with stakeholders, California Native American tribes, and state agencies, including with recommendation for increasing tribal stewardship of conservation lands and increasing ancestral land return, as provided.

AB 1284 (Ramos, Chapter 657, Statutes of 2024) encourages CNRA and its departments to enter into meaningful co-management and co-governance agreements for the management of natural resources.

AB 379 (Gallager, Chapter 701, Statutes of 2021) makes California Native American tribes eligible for many WCB programs, among other provisions.

SUGGESTED AMENDMENTS

AMENDMENT 1

Strike Section 4, PRC §5096.516 and replace it with

“It is the intent of the Legislature to develop a faster public process for the Department of Fish and Wildlife to return lands that meet certain criteria to federally recognized tribes.”

SUPPORT

California Rural Indian Health Board, Inc.

Environmental Protection Information Center (EPIC)

Karuk Tribe

Yuhaaviatam of San Manuel Nation

OPPOSITION

California Land Watch (unless amended)

Natural Heritage Institute

The Honorable Chris Howard, Supervisor, District 3, County of Del Norte (unless amended)

One individual

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 53

Author:(Ramos, et al.)

As Amended Ver:February 24, 2025

Majority vote

SUMMARY

Excludes, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, up to $20,000 of uniformed services retirement pay and annuity payments from a United States Department of Defense Survivor Benefit Plan received by qualified taxpayers during the taxable year from gross income under the Personal Income Tax (PIT) Law.

Major Provisions

1. Defines the following terms for purposes of the retirement pay exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "Uniformed services" are the Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the United States Public Health Service, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps.
2. Defines the following terms for purposes of the annuity payment exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "United States Department of Defense Survivor Benefit Plan" is a survivor benefit plan established pursuant to Sections 1447 to 1455, inclusive, of Title 10 of the United States Code.
3. Provides the income exclusions for taxable years beginning on or after January 1, 2025 and before January 1, 2030.
4. Takes immediate effect as a tax levy.
5. Repeals both gross income exclusion provisions on December 1, 2030.

COMMENTS

Military benefits: This bill excludes uniformed services retirement pay and Survivor Benefit Plan annuity payments from gross income, thus providing a tax benefit for retired members of the uniformed services and their beneficiaries. As of January 31, 2023, 127,793 military retirees in California received total monthly payments of over $362 million or about $4.3 billion annually from the United States Department of Defense (DoD). Generally, service members can retire from active duty at any age once they have completed at least 20 years of service. In addition, persons who meet retirement requirements partially or entirely through reserve or National Guard service receive retirement pay after age 59. As of January 31, 2023, 25,705 survivors in California received total monthly payments of just over $39 million or about $468 million annually, from the Survivor Benefit Plan, which allows a military retiree to ensure, after death, a continuous lifetime annuity for their dependents. A military retiree pays premiums from their gross retired pay for the Survivor Benefit Plan coverage, which is not taxed at the federal or state level.

California compared to other states: A significant number of states exclude military retirement pay from being taxed in the state, and California appears to be an outlier as the only state that fully taxes military retirement pay. Twenty-seven states do not tax military retirement pay and 14 states tax military retirement income partially through income exemptions and exclusions. Five states (Arizona, Utah, Indiana, Nebraska, and North Carolina) passed laws to fully exclude military retirement income from taxation starting for the 2021 or 2022 taxable year. Vermont and Virginia enacted legislation in 2022 exempting the first $10,000 in military retirement pay from state income taxation for qualifying taxpayers. A significant number of states are also not taxing annuity payments from the Survivor Benefit Plan. Arizona, North Carolina, and Utah passed legislation to exclude survivor annuity payments in 2021 from gross income for income taxation purposes. Supporters of this bill contend that preferable tax treatment in other states creates a strong incentive for military retirees and their families to move out of California.

Governor Newsom proposes partial income exclusion in January budget: The 2025-26 Governor's Budget released on January 10, 2025 proposes a partial income exclusion of military retirement pay and survivor benefits. The proposed exemption would exclude up to $20,000 of military retirement income for qualifying taxpayers for the 2025 through 2030 taxable years. Additionally, the exemption would be limited to taxpayers whose adjusted gross income does not exceed $250,000 in income if filing jointly and up to $125,000 for single filers. The Governor's Budget estimates that this proposal will reduce revenues by $130 million in FY 2025-26 and by $85 million annually thereafter. AB 53 was recently amended to align with the Governor's proposal.

Potential for double tax benefit and nonconformity: Under existing federal law, members of the uniformed services may elect to reduce their retirement pay to provide an annuity to their survivors and families. This amount is generally excluded from gross income (front-end tax benefit). Under this bill, the survivors would also receive tax-free money (back-end tax benefit). Therefore, this bill results in a front-end and back-end tax benefit, a net loss for the state. Additionally, this bill would reestablish a state gross income exclusion for which federal law appears to have no counterpart, thus increasing nonconformity. California typically conforms to federal law for gross income exclusions for ease of administration and taxpayer compliance.

What is the income cap? In order for a taxpayer to benefit from the gross income exclusion, their adjusted gross income cannot exceed $250,000 for joint filers, or $125,000 for single filers, in the taxable year. A taxpayer's adjusted gross income is their total (gross) income from all sources minus certain adjustments, such as qualifying retirement contributions and amounts paid in student loan interest. For a taxpayer considering whether they qualify for this income exclusion, it may be unclear whether they should include their military retirement pay or survivor benefit amounts when calculating their adjusted gross income. The author may wish to add clarifying language to avoid taxpayer confusion and ensure consistent application.

According to the Author

California is the only state that taxes the full amount of the pensions of our military personnel. These men and women served our nation in a variety of valuable capacities, and they and their families have frequently done so at great personal sacrifice. In order to make the state more veteran friendly and honor the many sacrifices of our armed services personnel and their surviving spouses, we should follow suit with the rest of the country and provide a state tax exemption. By doing so, we tell our veterans that California honors their service. The state would be able to retain and attract uniformed service retirees to California for the purposes of strengthening the state's skilled workforce, bringing stability to communities, and contributing to the state and local tax base.

Arguments in Support

California currently bears the unfortunate distinction of being the only state that does not provide an exemption for military retirement pay. AB 53 seeks to address this disparity and reverse the 20-year trend of military retirees leaving California to settle in states with more favorable tax policies. These retirees, often under the age of 40, bring valuable skills, leadership, and expertise to their second careers, contributing significantly to California's workforce and economy.

Between 2000 and 2016, while the national military retiree population grew by over 17%, California experienced a decline of more than 12% in its military retiree population. This outmigration has cost the state millions of dollars in federal funds that would have supported military retirees, and their families had they remained here.

Arguments in Opposition

California voters secured funding for public education via Proposition 98, which provides funding to our TK-12 schools and Community Colleges from revenues of the General Fund. Specifically public education is funded mainly by the income tax, corporate income tax, sales and use tax, and property taxes. Tax credits, exemptions, and other expenditures however, remove funding from public education. For every dollar that is provided in tax expenditures, approximately 40 cents of each dollar comes out of California's classrooms. For this reason, the CFT opposes tax expenditures. While the merit and goal of the bill are laudable, educators prefer that the state invest in progressive tax policies, such as a wealth tax, which would gather a minuscule amount of revenue from those who count their net worth in the billions. Revenue from such a source would more than cover the goal of this bill and more, without harming others in this zero-sum environment.

FISCAL COMMENTS

According to the Assembly Appropriations Committee:

General Fund (GF) revenue loss of approximately $110 million in fiscal year (FY) 2025-26, $75 million in FY 2026-27, and $75 million in FY 2027-28. By decreasing PIT revenue, this bill also likely decreases Proposition 98 GF spending by approximately 40% of the revenue loss (the exact amount depends on the specific amount of the annual Proposition 98 guarantee).

The Governor's proposed state budget for FY 2025-26 includes this partial gross income exclusion for military retirement pay and survivor benefits.

VOTES

ASM REVENUE AND TAXATION: 7-0-0

YES: Gipson, Ta, Carrillo, DeMaio, Garcia, McKinnor, Quirk-Silva

ASM APPROPRIATIONS: 14-0-1

YES: Wicks, Arambula, Calderon, Caloza, Dixon, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache, Ta, Tangipa

ABS, ABST OR NV: Sanchez

UPDATED

VERSION: February 24, 2025

CONSULTANT: Wesley Whitaker / REV. & TAX. / (916) 319-2098 FN: 0000598

Date of Hearing: May 21, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 53

Author:(Ramos) – As Amended Ver:February 24, 2025

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill provides a partial gross income exclusion for certain military retirement pay and survivor benefits.

Specifically, this bill:

1. Provides, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, an exclusion from gross income of up to $20,000, under the Personal Income Tax Law, for retirement pay from the federal government for specified military services and annuity payments received from a U.S. Department of Defense Survivor Benefit Plan. A qualified taxpayer must have adjusted gross income (AGI) of $125,000 or less, or $250,000 or less in the case of a surviving spouse or spouses filing a joint return.
2. Declares the goal of this tax expenditure and that there is no related performance data to collect.

FISCAL EFFECT:

General Fund (GF) revenue loss of approximately $110 million in fiscal year (FY) 2025-26, $75 million in FY 2026-27, and $75 million in FY 2027-28. By decreasing PIT revenue, this bill also likely decreases Proposition 98 GF spending by approximately 40% of the revenue loss (the exact amount depends on the specific amount of the annual Proposition 98 guarantee).

The Governor’s proposed state budget for FY 2025-26 includes this partial gross income exclusion for military retirement pay and survivor benefits.

COMMENTS:

1. Purpose. According to the author:

California is the only state that taxes the full amount of the pensions of our military personnel. These men and women served our nation in a variety of valuable capacities, and they and their families have frequently done so at great personal sacrifice. In order to make the state more veteran friendly and honor the many sacrifices of our armed services personnel and their surviving spouses, we should follow suit with the rest of the country and provide a state tax exemption.

1. Military Benefits. As of January 31, 2023, 127,793 military retirees in California received total monthly payments of over $362 million, or about $4.3 billion annually, from the U.S. Department of Defense. Generally, service members may retire from active duty at any age once they have completed at least 20 years of service. In addition, persons who meet retirement requirements partially or entirely through reserve or National Guard service receive retirement pay after age 59. Additionally, as of January 31, 2023, 25,705 individuals in California received total monthly payments of over $39 million, or about $468 million annually, from the Survivor Benefit Plan, which allows a military retiree to ensure, after death, a continuous lifetime annuity for their dependents. A military retiree pays premiums from their gross retired pay for such coverage, which is not taxed at the federal or state level.

California previously offered a military-specific income exclusion until the 1987 tax year, when the tax benefit morphed into a tax credit equal to 4% of the eligible income received by an individual with adjusted gross income under $27,000. The tax credit sunset on January 1, 1992. This bill excludes uniformed services retirement pay and Survivor Benefit Plan annuity payments from gross income, thus providing a tax benefit for retired members of the uniformed services and their beneficiaries.

1. Support and Opposition. This bill is co-sponsored by State Treasurer Fiona Ma, who argues, “Between 2000 and 2016, while the national population of military retirees grew by 17%, California experienced a decline in its own military retiree population, partly due to the tax burden.” This bill is also supported by various veterans groups, local government entities, and the State Board of Equalization.

This bill is opposed by the California Federation of Teachers, which generally opposes tax expenditures, and argues, “While the merit and goal of the bill are laudable, educators prefer that the state invest in progressive tax policies, such as a wealth tax…Revenue from such a source would more than cover the goal of this bill and more, without harming others in this zero-sum environment.”

1. Prior Legislation. AB 46 (Ramos), of the 2023-24 Legislative Session, was similar to this bill, but would have provided a full gross income exclusion with no AGI cap. AB 46 was held on the Senate Appropriations Committee’s suspense file.

AB 1623 (Ramos), of the 2021-22 Legislative Session, was similar to AB 46, except AB 1623 defined a qualified taxpayer for purposes of the retirement income exclusion to mean a person over age 60. AB 1623 was held on this committee’s suspense file.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: May 5, 2025

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Mike Gipson, Chair

ABPCA Bill Id:AB 53 (

Author:Ramos) – As Amended Ver:February 24, 2025

SUSPENSE

Majority vote. Tax levy. Fiscal committee.

SUBJECT: Personal income taxes: exclusion: Military Services Retirement and Surviving Spouse Benefit Payment Act

SUMMARY: Excludes, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, up to $20,000 of uniformed services retirement pay and annuity payments from a United States Department of Defense Survivor Benefit Plan received by qualified taxpayers during the taxable year from gross income under the Personal Income Tax (PIT) Law. Specifically, this bill:

1. Contains the following legislative findings and declarations:
   1. Servicemembers are eligible to retire from the military after 20 years of service. These retirees devoted the prime years of their life to defending the freedom of all Americans;
   2. To preserve the current policy of an all-volunteer force while still maintaining critical skills and readiness requires the retention of qualified military personnel, both enlisted and officers. This retention of military professionals also saves the costs to the taxpayer associated with training replacement personnel in essential skills;
   3. Retired members of the nation's two nonarmed uniformed services, which consist of the commissioned corps of the United States Public Health Service and the National Oceanic and Atmospheric Administration Commissioned Officer Corps, also provide valuable service to the nation's health and environmental safety;
   4. Providing a state income tax exclusion to retirees of the uniformed services not only signifies the gratitude of Californians for these men and women who chose to serve our country, it also benefits the state and local economies by helping to retain skilled and motivated individuals in California;
   5. The number one issue for employers in California is attracting a qualified workforce. Approximately 60,000 high-tech jobs are unfilled. Uniformed service retirees are highly skilled, often in areas requiring technical and management expertise. These men and women often continue to be valuable assets to our schools, local charities, and nonprofit organizations;
   6. Substantial new federal funds are infused into the state and local economies not only from retirement pay, but also from the full taxation of their second careers. These retirees may also qualify for federal veterans' benefits, which further bring new monies into the state; and,
   7. The United States Department of Defense's Survivor Benefit Plan allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The maximum annuity for a spouse is based on 55% of the member's retirement pay. Eligible children may also be beneficiaries. State income taxation of these funds, which are critical to the economic well-being of those who have suffered the loss of a husband, wife, father, or mother, can place the surviving family members in risk of falling into the state and local safety nets.
2. Excludes up to $20,000 of retirement pay received by a taxpayer from the federal government for service in the "uniformed services" during the taxable year from gross income under the PIT Law for taxable years beginning on or after January 1, 2025, and before January 1, 2030.
3. Defines the following terms for purposes of the retirement pay exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "Uniformed services" are the Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the United States Public Health Service, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps.
4. Excludes up to $20,000 of annuity payments received by a qualified taxpayer under the United States Department of Defense Survivor Benefit Plan during the taxable year from gross income for taxable years beginning on or after January 1, 2025, and before January 1, 2030.
5. Defines the following terms for purposes of the annuity payment exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "United States Department of Defense Survivor Benefit Plan" is a survivor benefit plan established pursuant to Sections 1447 to 1455, inclusive, of Title 10 of the United States Code.
6. Repeals both gross income exclusion provisions on December 1, 2030.
7. Makes findings and declarations in compliance with Revenue and Taxation Code (R&TC) Section 41.
8. Takes immediate effect as a tax levy.

EXISTING LAW:

1. Conforms to federal law, which provides that "gross income" includes all income from whatever source derived unless expressly excluded. (Internal Revenue Code (IRC) Section 61 and R&TC Section 17071.) Gross income includes compensation for services, business income, gain from selling property, interest, rents, royalties, dividends, and pensions. Military retirement pay of California residents is taxable.
2. Provides various exclusions from gross income in determining tax liability under the PIT Law. (R&TC Section 17131 et seq.)
3. Excludes from gross income, under state and federal law, certain types of income for an individual's active service in the Armed Forces, such as military pay for time served in combat zones, disability compensation, and death benefits paid to qualified survivors. (R&TC Section 17142.5.)
4. Excludes from gross income specified death benefits received by the surviving spouse or designated beneficiary of any member of the California National Guard, State Military Reserve, or Naval Militia who dies or is killed in the performance of duty, as specified. (R&TC Section 17132.4.)
5. Allows, under existing federal law, members of uniformed services to elect to reduce their retirement pay pre-tax to provide an annuity to their survivors. In addition, under federal and state tax laws, the reduction is excluded from gross income.
6. Provides, under federal and state tax laws that certain annuities paid to survivors are in the survivors' gross income for tax purposes. Therefore, the annuities paid are taxable.

FISCAL EFFECT: The Franchise Tax Board (FTB) estimates General Fund revenue losses of $110 million for fiscal year (FY) 2025-26, $75 million for FY 2026-27, and $75 million for FY 2027-28.

COMMENTS:

1. The author has provided the following statement in support of this bill:

California is the only state that taxes the full amount of the pensions of our military personnel. These men and women served our nation in a variety of valuable capacities, and they and their families have frequently done so at great personal sacrifice. In order to make the state more veteran friendly and honor the many sacrifices of our armed services personnel and their surviving spouses, we should follow suit with the rest of the country and provide a state tax exemption. By doing so, we tell our veterans that California honors their service. The state would be able to retain and attract uniformed service retirees to California for the purposes of strengthening the state's skilled workforce, bringing stability to communities, and contributing to the state and local tax base.

1. This bill is supported by several veteran's organizations and sponsored by the California Council of Chapters Affiliated Military Officers Association of America (CALMOAA), who note, in part:

California currently bears the unfortunate distinction of being the only state that does not provide an exemption for military retirement pay. AB 53 seeks to address this disparity and reverse the 20-year trend of military retirees leaving California to settle in states with more favorable tax policies. These retirees, often under the age of 40, bring valuable skills, leadership, and expertise to their second careers, contributing significantly to California's workforce and economy.

Between 2000 and 2016, while the national military retiree population grew by over 17%, California experienced a decline of more than 12% in its military retiree population. This outmigration has cost the state millions of dollars in federal funds that would have supported military retirees, and their families had they remained here.

1. Writing in opposition to this bill, CFT — A Union of Educators & Classified Professionals, AFT, AFL-CIO, notes, in part:

California voters secured funding for public education via Proposition 98, which provides funding to our TK-12 schools and Community Colleges from revenues of the General Fund. Specifically public education is funded mainly by the income tax, corporate income tax, sales and use tax, and property taxes. Tax credits, exemptions, and other expenditures however, remove funding from public education. For every dollar that is provided in tax expenditures, approximately 40 cents of each dollar comes out of California's classrooms. For this reason, the CFT opposes tax expenditures. While the merit and goal of the bill are laudable, educators prefer that the state invest in progressive tax policies, such as a wealth tax, which would gather a minuscule amount of revenue from those who count their net worth in the billions. Revenue from such a source would more than cover the goal of this bill and more, without harming others in this zero-sum environment.

1. Committee Staff Comments:
   1. What would this bill do? This bill allows qualifying taxpayers to exclude up to $20,000 of uniformed services retirement pay and annuity payments from the United States Department of Defense Survivor Benefit Plan from gross income for taxable years beginning on or after January 1, 2025 and before January 1, 2030. In other words, this bill provides that up to $20,000 of retirement pay for members of the uniformed services and survivor benefits paid to beneficiaries are not considered taxable income for the purposes of the PIT, provided that the taxpayer's adjusted gross income does not exceed $125,000 for single filers ($250,000 for joint filers).
   2. Who receives military retirement payments and survivor annuity payments? As of January 31, 2023, 127,793 military retirees in California received total monthly payments of over $362 million or about $4.3 billion annually from the United States Department of Defense (DoD).^[1] Generally, service members can retire from active duty at any age with at least 20 years of service. In addition, persons who meet retirement requirements partially or entirely through reserve or National Guard service receive retirement pay after age 59.

Also, as of January 31, 2023, 25,705 survivors in California received total monthly payments of just over $39 million or about $468 million annually.^[2] The Survivor Benefit Plan allows a military retiree to ensure, after death, a continuous lifetime annuity for their dependents. A military retiree pays premiums for the Survivor Benefit Plan coverage upon retiring. Premiums are paid from gross retired pay and are not taxed at the federal level, and are also not taxed at the state level.

• 1. The population of California's military retirees and survivors receiving pay from the DoD declined at an increasing rate: Committee staff analyzed the DoD Office of Actuary's data. The data show that the population of military retirees receiving pay from the DoD in California has been declining by at least 1% year-over-year (YOY) since 2013, accelerating to declines of over 3% in recent years.^[3] California experienced this YOY decline while the world and the U.S. generally had a slight YOY increase. (See "TOTAL MILITARY RETIREES RECEIVING PAY FROM DOD" table below.)

The population of survivors receiving pay from DoD in California has also experienced a persistent YOY decline, at a greater rate than in the world and the U.S. (See "TOTAL SURVIVORS RECEIVING PAY FROM DOD" table on next page.)

• 1. Need to improve California's attractiveness to veterans and discharging service members: In a 2015 report to the Governor, the Governor's Military Council stated on page 70:

At the same time, many veterans and discharging service members choose to move to other states. While some portion of these individuals are simply returning to their home state, others leave California based on concerns about our state's cost of living or because they are attracted to incentives provided by other states for veterans. State leaders should explore appropriate ways to incentivize veterans to stay in California.^[4]

• 1. Governor Newsom proposes partial income exclusion in January budget: The 2025-26 Governor's Budget released on January 10 proposes a partial income exclusion of military retirement pay and survivor benefits. The proposed exemption would exclude up to $20,000 of military retirement income for qualifying taxpayers for the 2025 through 2030 taxable years. Additionally, the exemption would be limited to taxpayers whose adjusted gross income does not exceed $250,000 in income if filing jointly and up to $125,000 for single filers. The Governor's Budget estimates that this proposal will reduce revenues by $130 million in FY 2025-26 and by $85 million annually thereafter. AB 53 was recently amended to align with the Governor's proposal.
     
  2. California previously offered military-specific income exclusions and later a targeted tax credit: For taxable years beginning December 22, 1972 through January 1, 1986, California law provided taxpayers an annual $1,000 income exclusion for compensation received during active duty in the Armed Forces or State Military Reserve. State law also provided taxpayers an exclusion of up to $500 per month for any compensation received during active duty in the National Guard in connection with an emergency. Additionally, an income exclusion was applied to pensions or retirement pay received by an individual for their service in the Armed Forces, the State Military Reserve, or the National Guard. (See former R&TC Section 17146.)

For taxable years beginning January 1, 1987 through January 1, 1992, a member of the Armed Forces was allowed a credit, rather than an exclusion from gross income, in an amount equal to 4% of the eligible income received by an individual whose adjusted gross income was less than $27,000. Eligible income included salary, wages, bonuses, allowances, pensions, retirement pay, and other compensation received by an individual for their services on extended active duty as a member of the Armed Forces, including the California National Guard or the State Military Reserve. This law remained in effect until its January 1, 1992 sunset. (See former R&TC Section 17053.13.)

• 1. Treatment of military retiree and survivor income by other states: A significant number of states exclude military retirement pay from being taxed, and California appears to be an outlier as the only state that fully taxes military retirement pay. For example, five states (Arizona, Utah, Indiana, Nebraska, and North Carolina) passed laws not to tax military retirement income starting for the 2021 or 2022 taxable year.^[5]

Twenty-seven states do not tax military retirement pay: Alabama, Arizona, Arkansas, Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Utah, West Virginia, and Wisconsin.

Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes residents on interest and dividends but does not tax regular earned income or pension income.

Fourteen states tax military retirement income partially through income exemptions and exclusions: Colorado, Delaware, Georgia, Idaho, Kentucky, Maryland, Montana, New Mexico, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, and Virginia.^[6] Some of these states consider the age of the qualified taxpayer in determining the amount of military retirement pay that can be excluded from gross income. For example, Maryland provides an income exclusion of up to $12,500 for taxpayers under 55; this amount increases to $20,000 for taxpayers that are 55 or older.

Vermont and Virginia enacted legislation in 2022 exempting the first $10,000 in military retirement pay from state income taxation for qualifying taxpayers^[7],[8] Vermont limits the income exclusion to taxpayers with an annual income of $75,000 or less for joint filers ($60,000 or less for single filers). California appears to now be the only state that fully taxes military retirement pay.

A significant number of states are also not taxing annuity payments from the Survivor Benefit Plan.^[9] For example, Arizona, North Carolina, and Utah passed legislation to not tax survivor annuity payments in 2021.^[10]

• 1. Taxation may not be the primary reason for the recent increase in migration out of California to other states: According to the Public Policy Institute of California (PPIC), people who move to California are more likely to be working age, to be employed, and to earn high wages—and are less likely to be in poverty—than those who move away.^[11] Moreover, a PPIC Statewide Survey found that one-third of Californians have seriously considered leaving the state because of housing costs.^[12] PPIC notes that the state's high cost of living, driven almost solely by comparatively high housing costs, remains an ongoing public policy challenge—one that needs resolution if the state is to be a place of opportunity for all of its residents.^[13]

Furthermore, lower income and middle-income taxpayers may be paying a higher percentage of total state and local taxes in other states than in California. For example, the Institute on Taxation and Economic Policy's study in 2018, based on one of the largest databases of tax returns and supplementary data, found that middle-income taxpayers in California pay 8.3% of total state and local taxes as a share of family income compared to 9.7% in Texas or 8.5% in Arizona.^[14] Therefore, legislative solutions that provide tax relief may not be as effective as those that decrease housing costs.

• 1. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, U.S. Treasury officials began arguing that these tax law features should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose, and there is a determinable cost associated with each (in the form of foregone revenues).

As the Department of Finance notes in its annual Tax Expenditure Report, there are several critical differences between tax expenditures and direct expenditures. First, tax expenditures are reviewed less frequently than direct expenditures. Second, there is generally no control over the amount of revenue losses associated with any given tax expenditure. Finally, it takes a two-thirds vote to rescind an existing tax expenditure absent a sunset date. This effectively results in a "one-way ratchet" whereby tax expenditures can be conferred by a majority vote but cannot be rescinded, regardless of efficacy or cost, without a supermajority vote. This bill enacts a new tax expenditure program in the form of gross income exclusions for military retirement pay and annuity payments from the United States Department of Defense Survivor Benefit Plan.

• 1. Committee's tax expenditure policy: This bill complies with R&TC Section 41 because it outlines specific goals, purposes, and objectives that the tax expenditure will achieve. In addition to the R&TC Section 41 requirements, this Committee's policy also requires that all tax expenditure proposals have an appropriate sunset provision to be eligible for a vote. Sunsets are required because eliminating a tax expenditure generally requires a two-thirds vote. Accordingly, this bill contains a 5-year sunset provision, which states that the income exclusions provided in this bill are repealed on December 1, 2030.

This Committee has historically treated bills creating a new tax expenditure that benefits veterans as subject to a 10-year sunset. The author may wish to consider extending the sunset date to January 1, 2035.

• 1. Potential unintended consequences:
     1. A double tax benefit: Under existing federal law, members of the uniformed services may elect to reduce their retirement pay to provide an annuity to their survivors and families. This amount is generally excluded from gross income (front-end tax benefit). Under this bill, the survivors would also receive tax-free money (back-end tax benefit). Therefore, this bill results in a front-end and back-end tax benefit, a net loss for the state.
     2. Nonconformity to federal law: This bill establishes exclusions for which federal law has no counterpart. Generally, nonconformity to federal law adds complexity and additional administrative burdens for taxpayers.
     3. A slippery slope? It should be noted that California currently taxes the retirement benefits of teachers, first responders like police and fire, and other public service workers. As a result, this Committee may face a slippery slope of choosing which groups should be rewarded with similar income exclusions.
     4. What is the income cap? In order for a taxpayer to benefit from the gross income exclusion, their adjusted gross income cannot exceed $250,000 for joint filers, or $125,000 for single filers, in the taxable year. A taxpayer's adjusted gross income is their total (gross) income from all sources minus certain adjustments, such as qualifying retirement contributions and amounts paid in student loan interest. For a taxpayer considering whether they qualify for this income exclusion, it may be unclear whether they should include their military retirement pay or survivor benefit amounts when calculating their adjusted gross income. The author may wish to add clarifying language to avoid taxpayer confusion and ensure consistent application.
        
        
  2. Prior Legislation:

1. AB 46 (Ramos), of the 2023-24 Legislative Session, would have excluded from gross income uniformed services retirement pay and annuity payments from a United States Department of Defense Survivor Benefit Plan. AB 46 was held on the Senate Appropriations Committee's Suspense File.
   
2. AB 1623 (Ramos), of the 2021-22 Legislative Session, was substantially similar to AB 46. AB 1623 was held on the Assembly Appropriations Committee's Suspense File.
3. AB 1629 (Seyarto), of the 2021-22 Legislative Session, would have excluded from gross income survivor benefits or payments, not to exceed $20,000 per taxable year, received under the federal Survivor Benefit Plan for a period of five taxable years. AB 1629 was not heard by this Committee.
4. AB 291 (Seyarto), of the 2021-22 Legislative Session, would have excluded from gross income survivor benefits and payments received under the federal Survivor Benefit Plan for five taxable years. AB 291 was not heard by this Committee.
5. AB 427 (Brough), of the 2019-20 Legislative Session, would have excluded from gross income specified amounts of retirement pay for 10 taxable years. AB 427 was held on the Assembly Appropriations Committee's Suspense File.
6. AB 2380 (Choi), of the 2019-20 Legislative Session, would have excluded from gross income survivor benefits or payments received under the federal Survivor Benefit Plan for five taxable years. AB 2380 was not heard by this Committee.
7. SB 1007 (Hueso), of the 2019-20 Legislative Session, would have excluded from gross income military retirement pay for 10 taxable years. SB 1007 was not heard due to the shortened 2020 Legislative Calendar as a result of the COVID-19 pandemic.
8. SB 1071 (Wilk), of the 2019-20 Legislative Session, would have excluded from gross income a percentage of military retirement pay for 10 taxable years. SB 1071 was never heard due to the shortened 2020 Legislative Calendar as a result of the COVID-19 pandemic.

REGISTERED SUPPORT / OPPOSITION:

Support

American Legion, Department of California
Amvets, Department of California
California Association of County Veterans Service Officers
California Council of Chapters Military Officers Association of America
California Enlisted Association of The National Guard of The United States (CAL-EANGUS)
California Military Officers Association of America (CALMOAA)
California State Board of Equalization
California State Commanders Veterans Council
California State Treasurer Fiona Ma
California Tribal Business Alliance
County of Humboldt

County of Monterey

County of Riverside
Military Officers Association of America, California Council of Chapters
Peace Officers Research Association of California (PORAC)
Solano County Chapter Military Officers Association of America (MOAA)
Ventura County Chapter of The Military Officers Association of America (VCC-MOAA)
Vietnam Veterans of America, California State Council

139 Individuals

Opposition

CFT — A Union of Educators & Classified Professionals, AFT, AFL-CIO

Analysis Prepared by: Wesley Whitaker / REV. & TAX. / (916) 319-2098

1. Military retirees and survivors by congressional district as of January 31, 2023 for the 118^th congress (CONGDIST 2022), Office of the Actuary, Department of Defense. https://actuary.defense.gov/Portals/15/Cong%20Dist%202022%20v3.pdf?ver=13J1Z-ldxRlvJeXfnkReDg%3d%3d. ↑

2. Id. ↑

3. Id. ↑

4. Maintaining and Expanding California's National Security Mission, Governor's Military Council, Office of Governor Edmund G. Brown Jr. (June 2015) https://militarycouncil.ca.gov/
   s_councilreport/. ↑

5. Geier, Yahoo Smartasset. These five states just eliminated income tax on military retirement. (January 11, 2022.) https://www.yahoo.com/video/five-states-just-eliminated-income-203758421.html. ↑

6. Baumhover, Military Retirement Income Taxes by State – Which States Don't Tax Military Retirement Pay?, The Military Wallet, (October 18, 2022). https://themilitarywallet.com/military-retirement-pay-tax-exempt/. ↑

7. Hanley, State Tax Update: Details on New Virginia Retiree Exemptions and Much More, Military Officers Association of America, (July 22, 2022). https://www.moaa.org/content/publications-and-media/news-articles/2022-news-articles/state-tax-update-details-on-the-new-virginia-law-and-much-more/. ↑

8. Tax Exemptions for Veterans, Office of Veterans Affairs, State of Vermont. https://veterans.vermont.gov/benefits-and-services/veteran-benefits/tax-exemptions-veterans. ↑

9. Absher, Military.com (January 10, 2022). States tax information for military members and retirees. https://www.military.com/money/personal-finance/state-tax-information.html. ↑

10. Absher, Military.com (January 11, 2022). 5 more states make military retirement tax free. https://www.military.com/daily-news/2022/01/10/five-more-states-make-military-retirement-tax-free.html. ↑

11. Johnson, Who's leaving California—and who's moving in?, Public Policy Institute of California (May 6, 2021). https://www.ppic.org/blog/whos-leaving-california-and-whos-moving-in/. ↑

12. Baldassare, Bonner, Lawler, & Thomas, PPIC statewide survey: Californians and their government, Public Policy Institute. https://www.ppic.org/publication/
    ppic-statewide-survey-californians-and-their-government-february-2023/. ↑

13. Johnson (2021). ↑

14. Institute on Taxation and Economic Policy, Who pays? (6th Edition 2018). https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf. ↑

Date of Hearing: March 17, 2025

ASSEMBLY COMMITTEE ON REVENUE AND TAXATION

Mike Gipson, Chair

ABPCA Bill Id:AB 53 (

Author:Ramos) – As Amended Ver:February 24, 2025


Majority vote. Tax levy. Fiscal committee.

SUBJECT: Personal income taxes: exclusion: Military Services Retirement and Surviving Spouse Benefit Payment Act

SUMMARY: Excludes, for taxable years beginning on or after January 1, 2025, and before January 1, 2030, up to $20,000 of uniformed services retirement pay and annuity payments from a United States Department of Defense Survivor Benefit Plan received by qualified taxpayers during the taxable year from gross income under the Personal Income Tax (PIT) Law. Specifically, this bill:

1. Contains the following legislative findings and declarations:
   1. Servicemembers are eligible to retire from the military after 20 years of service. These retirees devoted the prime years of their life to defending the freedom of all Americans;
   2. To preserve the current policy of an all-volunteer force while still maintaining critical skills and readiness requires the retention of qualified military personnel, both enlisted and officers. This retention of military professionals also saves the costs to the taxpayer associated with training replacement personnel in essential skills;
   3. Retired members of the nation's two nonarmed uniformed services, which consist of the commissioned corps of the United States Public Health Service and the National Oceanic and Atmospheric Administration Commissioned Officer Corps, also provide valuable service to the nation's health and environmental safety;
   4. Providing a state income tax exclusion to retirees of the uniformed services not only signifies the gratitude of Californians for these men and women who chose to serve our country, it also benefits the state and local economies by helping to retain skilled and motivated individuals in California;
   5. The number one issue for employers in California is attracting a qualified workforce. Approximately 60,000 high-tech jobs are unfilled. Uniformed service retirees are highly skilled, often in areas requiring technical and management expertise. These men and women often continue to be valuable assets to our schools, local charities, and nonprofit organizations;
   6. Substantial new federal funds are infused into the state and local economies not only from retirement pay, but also from the full taxation of their second careers. These retirees may also qualify for federal veterans' benefits, which further bring new monies into the state; and,
   7. The United States Department of Defense's Survivor Benefit Plan allows a retiree to ensure, after death, a continuous lifetime annuity for their dependents. The maximum annuity for a spouse is based on 55% of the member's retirement pay. Eligible children may also be beneficiaries. State income taxation of these funds, which are critical to the economic well-being of those who have suffered the loss of a husband, wife, father, or mother, can place the surviving family members in risk of falling into the state and local safety nets.
2. Excludes up to $20,000 of retirement pay received by a taxpayer from the federal government for service in the "uniformed services" during the taxable year from gross income under the PIT Law for taxable years beginning on or after January 1, 2025, and before January 1, 2030.
3. Defines the following terms for purposes of the retirement pay exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "Uniformed services" are the Armed Forces of the United States, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the United States Public Health Service, and the National Oceanic and Atmospheric Administration Commissioned Officer Corps.
4. Excludes up to $20,000 of annuity payments received by a qualified taxpayer under the United States Department of Defense Survivor Benefit Plan during the taxable year from gross income for taxable years beginning on or after January 1, 2025, and before January 1, 2030.
5. Defines the following terms for purposes of the annuity payment exclusion:
   1. "Qualified taxpayer" is a taxpayer who satisfies either of the following:
      1. In the case of a surviving spouse or spouses filing a joint return, adjusted gross income does not exceed $250,000; or,
      2. In the case of any other individual, adjusted gross income does not exceed $125,000.
   2. "United States Department of Defense Survivor Benefit Plan" is a survivor benefit plan established pursuant to Sections 1447 to 1455, inclusive, of Title 10 of the United States Code.
6. Repeals both gross income exclusion provisions on December 1, 2030.
7. Makes findings and declarations in compliance with Revenue and Taxation Code (R&TC) Section 41.
8. Takes immediate effect as a tax levy.

EXISTING LAW:

1. Conforms to federal law, which provides that "gross income" includes all income from whatever source derived unless expressly excluded. (Internal Revenue Code (IRC) Section 61 and R&TC Section 17071.) Gross income includes compensation for services, business income, gain from selling property, interest, rents, royalties, dividends, and pensions. Military retirement pay of California residents is taxable.
2. Provides various exclusions from gross income in determining tax liability under the PIT Law. (R&TC Section 17131 et seq.)
3. Excludes from gross income, under state and federal law, certain types of income for an individual's active service in the Armed Forces, such as military pay for time served in combat zones, disability compensation, and death benefits paid to qualified survivors. (R&TC Section 17142.5.)
4. Excludes from gross income specified death benefits received by the surviving spouse or designated beneficiary of any member of the California National Guard, State Military Reserve, or Naval Militia who dies or is killed in the performance of duty, as specified. (R&TC Section 17132.4.)
5. Allows, under existing federal law, members of uniformed services to elect to reduce their retirement pay pre-tax to provide an annuity to their survivors. In addition, under federal and state tax laws, the reduction is excluded from gross income.
6. Provides, under federal and state tax laws that certain annuities paid to survivors are in the survivors' gross income for tax purposes. Therefore, the annuities paid are taxable.

FISCAL EFFECT: The Franchise Tax Board (FTB) estimates General Fund revenue losses of $110 million for fiscal year (FY) 2025-26, $75 million for FY 2026-27, and $75 million for FY 2027-28.

COMMENTS:

1. The author has provided the following statement in support of this bill:

California is the only state that taxes the full amount of the pensions of our military personnel. These men and women served our nation in a variety of valuable capacities, and they and their families have frequently done so at great personal sacrifice. In order to make the state more veteran friendly and honor the many sacrifices of our armed services personnel and their surviving spouses, we should follow suit with the rest of the country and provide a state tax exemption. By doing so, we tell our veterans that California honors their service. The state would be able to retain and attract uniformed service retirees to California for the purposes of strengthening the state's skilled workforce, bringing stability to communities, and contributing to the state and local tax base.

1. This bill is supported by several veteran's organizations and sponsored by the California Council of Chapters Affiliated Military Officers Association of America (CALMOAA), who note, in part:

California currently bears the unfortunate distinction of being the only state that does not provide an exemption for military retirement pay. AB 53 seeks to address this disparity and reverse the 20-year trend of military retirees leaving California to settle in states with more favorable tax policies. These retirees, often under the age of 40, bring valuable skills, leadership, and expertise to their second careers, contributing significantly to California's workforce and economy.

Between 2000 and 2016, while the national military retiree population grew by over 17%, California experienced a decline of more than 12% in its military retiree population. This outmigration has cost the state millions of dollars in federal funds that would have supported military retirees, and their families had they remained here.

1. Committee Staff Comments:
   1. What would this bill do? This bill allows qualifying taxpayers to exclude up to $20,000 of uniformed services retirement pay and annuity payments from the United States Department of Defense Survivor Benefit Plan from gross income for taxable years beginning on or after January 1, 2025 and before January 1, 2030. In other words, this bill provides that up to $20,000 of retirement pay for members of the uniformed services and survivor benefits paid to beneficiaries are not considered taxable income for the purposes of the PIT, provided that the taxpayer's adjusted gross income does not exceed $125,000 for single filers ($250,000 for joint filers).
   2. Who receives military retirement payments and survivor annuity payments? As of January 31, 2023, 127,793 military retirees in California received total monthly payments of over $362 million or about $4.3 billion annually from the United States Department of Defense (DoD).^[1] Generally, service members can retire from active duty at any age with at least 20 years of service. In addition, persons who meet retirement requirements partially or entirely through reserve or National Guard service receive retirement pay after age 59.

Also, as of January 31, 2023, 25,705 survivors in California received total monthly payments of just over $39 million or about $468 million annually.^[2] The Survivor Benefit Plan allows a military retiree to ensure, after death, a continuous lifetime annuity for their dependents. A military retiree pays premiums for the Survivor Benefit Plan coverage upon retiring. Premiums are paid from gross retired pay and are not taxed at the federal level, and are also not taxed at the state level.

• 1. The population of California's military retirees and survivors receiving pay from the DoD declined at an increasing rate: Committee staff analyzed the DoD Office of Actuary's data. The data show that the population of military retirees receiving pay from the DoD in California has been declining by at least 1% year-over-year (YOY) since 2013, accelerating to declines of over 3% in recent years.^[3] California experienced this YOY decline while the world and the U.S. generally had a slight YOY increase. (See "TOTAL MILITARY RETIREES RECEIVING PAY FROM DOD" table below.)

The population of survivors receiving pay from DoD in California has also experienced a persistent YOY decline, at a greater rate than in the world and the U.S. (See "TOTAL SURVIVORS RECEIVING PAY FROM DOD" table below.)

• 1. Need to improve California's attractiveness to veterans and discharging service members: In a 2015 report to the Governor, the Governor's Military Council stated on page 70:

At the same time, many veterans and discharging service members choose to move to other states. While some portion of these individuals are simply returning to their home state, others leave California based on concerns about our state's cost of living or because they are attracted to incentives provided by other states for veterans. State leaders should explore appropriate ways to incentivize veterans to stay in California.^[4]

• 1. Governor Newsom proposes partial income exclusion in January budget: The 2025-26 Governor's Budget released on January 10 proposes a partial income exclusion of military retirement pay and survivor benefits. The proposed exemption would exclude up to $20,000 of military retirement income for qualifying taxpayers for the 2025 through 2030 taxable years. Additionally, the exemption would be limited to taxpayers whose adjusted gross income does not exceed $250,000 in income if filing jointly and up to $125,000 for single filers. The Governor's Budget estimates that this proposal will reduce revenues by $130 million in FY 2025-26 and by $85 million annually thereafter. AB 53 was recently amended to align with the Governor's proposal.
     
  2. California previously offered military-specific income exclusions and later a targeted tax credit: For taxable years beginning December 22, 1972 through January 1, 1986, California law provided taxpayers an annual $1,000 income exclusion for compensation received during active duty in the Armed Forces or State Military Reserve. State law also provided taxpayers an exclusion of up to $500 per month for any compensation received during active duty in the National Guard in connection with an emergency. Additionally, an income exclusion was applied to pensions or retirement pay received by an individual for their service in the Armed Forces, the State Military Reserve, or the National Guard. (See former R&TC Section 17146.)

For taxable years beginning January 1, 1987 through January 1, 1992, a member of the Armed Forces was allowed a credit, rather than an exclusion from gross income, in an amount equal to 4% of the eligible income received by an individual whose adjusted gross income was less than $27,000. Eligible income included salary, wages, bonuses, allowances, pensions, retirement pay, and other compensation received by an individual for their services on extended active duty as a member of the Armed Forces, including the California National Guard or the State Military Reserve. This law remained in effect until its January 1, 1992 sunset. (See former R&TC Section 17053.13.)

• 1. Treatment of military retiree and survivor income by other states: A significant number of states exclude military retirement pay from being taxed, and California appears to be an outlier as the only state that fully taxes military retirement pay. For example, five states (Arizona, Utah, Indiana, Nebraska, and North Carolina) passed laws not to tax military retirement income starting for the 2021 or 2022 taxable year.^[5]

Twenty-seven states do not tax military retirement pay: Alabama, Arizona, Arkansas, Connecticut, Hawaii, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, Utah, West Virginia, and Wisconsin.

Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. New Hampshire taxes residents on interest and dividends but does not tax regular earned income or pension income.

Fourteen states tax military retirement income partially through income exemptions and exclusions: Colorado, Delaware, Georgia, Idaho, Kentucky, Maryland, Montana, New Mexico, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, and Virginia.^[6] Some of these states consider the age of the qualified taxpayer in determining the amount of military retirement pay that can be excluded from gross income. For example, Maryland provides an income exclusion of up to $12,500 for taxpayers under 55; this amount increases to $20,000 for taxpayers that are 55 or older.

Vermont and Virginia enacted legislation in 2022 exempting the first $10,000 in military retirement pay from state income taxation for qualifying taxpayers^[7],[8] Vermont limits the income exclusion to taxpayers with an annual income of $75,000 or less for joint filers ($60,000 or less for single filers). California appears to now be the only state that fully taxes military retirement pay.

A significant number of states are also not taxing annuity payments from the Survivor Benefit Plan.^[9] For example, Arizona, North Carolina, and Utah passed legislation to not tax survivor annuity payments in 2021.^[10]

• 1. Taxation may not be the primary reason for the recent increase in migration out of California to other states: According to the Public Policy Institute of California (PPIC), people who move to California are more likely to be working age, to be employed, and to earn high wages—and are less likely to be in poverty—than those who move away.^[11] Moreover, a PPIC Statewide Survey found that one-third of Californians have seriously considered leaving the state because of housing costs.^[12] PPIC notes that the state's high cost of living, driven almost solely by comparatively high housing costs, remains an ongoing public policy challenge—one that needs resolution if the state is to be a place of opportunity for all of its residents.^[13]

Furthermore, lower income and middle-income taxpayers may be paying a higher percentage of total state and local taxes in other states than in California. For example, the Institute on Taxation and Economic Policy's study in 2018, based on one of the largest databases of tax returns and supplementary data, found that middle-income taxpayers in California pay 8.3% of total state and local taxes as a share of family income compared to 9.7% in Texas or 8.5% in Arizona.^[14] Therefore, legislative solutions that provide tax relief may not be as effective as those that decrease housing costs.

• 1. What is a "tax expenditure"? Existing law provides various credits, deductions, exclusions, and exemptions for particular taxpayer groups. In the late 1960s, U.S. Treasury officials began arguing that these tax law features should be referred to as "expenditures" since they are generally enacted to accomplish some governmental purpose, and there is a determinable cost associated with each (in the form of foregone revenues).

As the Department of Finance notes in its annual Tax Expenditure Report, there are several critical differences between tax expenditures and direct expenditures. First, tax expenditures are reviewed less frequently than direct expenditures. Second, there is generally no control over the amount of revenue losses associated with any given tax expenditure. Finally, it takes a two-thirds vote to rescind an existing tax expenditure absent a sunset date. This effectively results in a "one-way ratchet" whereby tax expenditures can be conferred by a majority vote but cannot be rescinded, regardless of efficacy or cost, without a supermajority vote. This bill enacts a new tax expenditure program in the form of gross income exclusions for military retirement pay and annuity payments from the United States Department of Defense Survivor Benefit Plan.

• 1. Committee's tax expenditure policy: This bill complies with R&TC Section 41 because it outlines specific goals, purposes, and objectives that the tax expenditure will achieve. In addition to the R&TC Section 41 requirements, this Committee's policy also requires that all tax expenditure proposals have an appropriate sunset provision to be eligible for a vote. Sunsets are required because eliminating a tax expenditure generally requires a two-thirds vote. Accordingly, this bill contains a 5-year sunset provision, which states that the income exclusions provided in this bill are repealed on December 1, 2030.

This Committee has historically treated bills creating a new tax expenditure that benefits veterans as subject to a 10-year sunset. The author may wish to consider extending the sunset date to January 1, 2035.

• 1. Potential unintended consequences:
     1. A double tax benefit: Under existing federal law, members of the uniformed services may elect to reduce their retirement pay to provide an annuity to their survivors and families. This amount is generally excluded from gross income (front-end tax benefit). Under this bill, the survivors would also receive tax-free money (back-end tax benefit). Therefore, this bill results in a front-end and back-end tax benefit, a net loss for the state.
     2. Nonconformity to federal law: This bill establishes exclusions for which federal law has no counterpart. Generally, nonconformity to federal law adds complexity and additional administrative burdens for taxpayers.
     3. A slippery slope? It should be noted that California currently taxes the retirement benefits of teachers, first responders like police and fire, and other public service workers. As a result, this Committee may face a slippery slope of choosing which groups should be rewarded with similar income exclusions.
     4. What is the income cap? In order for a taxpayer to benefit from the gross income exclusion, their adjusted gross income cannot exceed $250,000 for joint filers, or $125,000 for single filers, in the taxable year. A taxpayer's adjusted gross income is their total (gross) income from all sources minus certain adjustments, such as qualifying retirement contributions and amounts paid in student loan interest. For a taxpayer considering whether they qualify for this income exclusion, it may be unclear whether they should include their military retirement pay or survivor benefit amounts when calculating their adjusted gross income. The author may wish to add clarifying language to avoid taxpayer confusion and ensure consistent application.
  2. Prior Legislation:

1. AB 46 (Ramos), of the 2023-24 Legislative Session, would have excluded from gross income uniformed services retirement pay and annuity payments from a United States Department of Defense Survivor Benefit Plan. AB 46 was held on the Senate Appropriations Committee's Suspense File.
   
2. AB 1623 (Ramos), of the 2021-22 Legislative Session, was substantially similar to AB 46. AB 1623 was held on the Assembly Appropriations Committee's Suspense File.
3. AB 1629 (Seyarto), of the 2021-22 Legislative Session, would have excluded from gross income survivor benefits or payments, not to exceed $20,000 per taxable year, received under the federal Survivor Benefit Plan for a period of five taxable years. AB 1629 was not heard by this Committee.
4. AB 291 (Seyarto), of the 2021-22 Legislative Session, would have excluded from gross income survivor benefits and payments received under the federal Survivor Benefit Plan for five taxable years. AB 291 was not heard by this Committee.
5. AB 427 (Brough), of the 2019-20 Legislative Session, would have excluded from gross income specified amounts of retirement pay for 10 taxable years. AB 427 was held on the Assembly Appropriations Committee's Suspense File.
6. AB 2380 (Choi), of the 2019-20 Legislative Session, would have excluded from gross income survivor benefits or payments received under the federal Survivor Benefit Plan for five taxable years. AB 2380 was not heard by this Committee.
7. SB 1007 (Hueso), of the 2019-20 Legislative Session, would have excluded from gross income military retirement pay for 10 taxable years. SB 1007 was not heard due to the shortened 2020 Legislative Calendar as a result of the COVID-19 pandemic.
8. SB 1071 (Wilk), of the 2019-20 Legislative Session, would have excluded from gross income a percentage of military retirement pay for 10 taxable years. SB 1071 was never heard due to the shortened 2020 Legislative Calendar as a result of the COVID-19 pandemic.

REGISTERED SUPPORT / OPPOSITION:

Support

American Legion, Department of California
Amvets, Department of California
California Association of County Veterans Service Officers
California Council of Chapters Military Officers Association of America
California Enlisted Association of The National Guard of The United States (CAL-EANGUS)
California Military Officers Association of America (CALMOAA)
California State Board of Equalization
California State Commanders Veterans Council
California State Treasurer Fiona Ma
California Tribal Business Alliance
County of Humboldt

County of Monterey

County of Riverside
Military Officers Association of America, California Council of Chapters
Peace Officers Research Association of California (PORAC)
Solano County Chapter Military Officers Association of America (MOAA)
Ventura County Chapter of The Military Officers Association of America (VCC-MOAA)
Vietnam Veterans of America, California State Council

139 Individuals

Opposition

None on file

Analysis Prepared by: Wesley Whitaker / REV. & TAX. / (916) 319-2098

1. Military retirees and survivors by congressional district as of January 31, 2023 for the 118^th congress (CONGDIST 2022), Office of the Actuary, Department of Defense. https://actuary.defense.gov/Portals/15/Cong%20Dist%202022%20v3.pdf?ver=13J1Z-ldxRlvJeXfnkReDg%3d%3d. ↑

2. Id. ↑

3. Id. ↑

4. Maintaining and Expanding California's National Security Mission, Governor's Military Council, Office of Governor Edmund G. Brown Jr. (June 2015) https://militarycouncil.ca.gov/
   s_councilreport/. ↑

5. Geier, Yahoo Smartasset. These five states just eliminated income tax on military retirement. (January 11, 2022.) https://www.yahoo.com/video/five-states-just-eliminated-income-203758421.html ↑

6. Baumhover, Military Retirement Income Taxes by State – Which States Don't Tax Military Retirement Pay?, The Military Wallet, (October 18, 2022). https://themilitarywallet.com/military-retirement-pay-tax-exempt/ ↑

7. Hanley, State Tax Update: Details on New Virginia Retiree Exemptions and Much More, Military Officers Association of America, (July 22, 2022). https://www.moaa.org/content/publications-and-media/news-articles/2022-news-articles/state-tax-update-details-on-the-new-virginia-law-and-much-more/ ↑

8. Tax Exemptions for Veterans, Office of Veterans Affairs, State of Vermont. https://veterans.vermont.gov/benefits-and-services/veteran-benefits/tax-exemptions-veterans ↑

9. Absher, Military.com (January 10, 2022). States tax information for military members and retirees. https://www.military.com/money/personal-finance/state-tax-information.html ↑

10. Absher, Military.com (January 11, 2022). 5 more states make military retirement tax free. https://www.military.com/daily-news/2022/01/10/five-more-states-make-military-retirement-tax-free.html ↑

11. Johnson, Who's leaving California—and who's moving in?, Public Policy Institute of California (May 6, 2021). https://www.ppic.org/blog/whos-leaving-california-and-whos-moving-in/ ↑

12. Baldassare, Bonner, Lawler, & Thomas, PPIC statewide survey: Californians and their government, Public Policy Institute. https://www.ppic.org/publication/
    ppic-statewide-survey-californians-and-their-government-february-2023/ ↑

13. Johnson (2021). ↑

14. Institute on Taxation and Economic Policy, Who pays? (6th Edition 2018). https://itep.sfo2.digitaloceanspaces.com/whopays-ITEP-2018.pdf ↑