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Senate Democrats Propose Major Tax Cut For Veterans

Plan to provide full exemption to federal retirement pay



By:
Stamford, CT | Added on February 18, 2015 At 06:00 PM

State Senate Democrats today unveiled their plan to provide a major tax break for retired veterans by providing a 100% exemption from the state income tax for federally taxable military retirement pay. 

 “Passing this bill will demonstrate Connecticut’s great appreciation for the service and sacrifice of our nation’s veterans by providing a one hundred percent exemption from the state income tax for federally taxable military retirement pay,” said Senate President Martin M. Looney (D-New Haven). “I believe we can and should do better to help our veterans transition back into civilian life here in Connecticut.

“As a veteran and former Chair of the Veterans’ Affairs Committee, I’ve seen the economic challenges that retired military personnel can face," said State Senator Carlo Leone (D-Stamford). This legislation will give additional economic relief to veterans, providing financial security for those living on fixed incomes and an incentive for those transitioning from military to civilian life to grow their families here in Connecticut.”

Current law in Connecticut provides for a 50% exemption of federal retirement pay to retired members of the U.S. Army, Navy, Air Force, Marines, Coast Guard, and Army and Air National Guard. Many other states already offer such an exemption. Of the states with an income tax (nine have none), 13 now offer a 100 percent exemption for military retirement pay, including Massachusetts and New York. The federal government currently exempts portions, and in some cases all, of military retirement pay for disabled veterans from the federal income tax. This existing Connecticut exemption benefits approximately 11,000 Connecticut veteran taxpayers each year, resulting in $3.9 million in foregone revenue in fiscal year 2014 and $4 million in fiscal year 2015. Increasing the exemption to one hundred percent would roughly double those figures.

“Most people would like to retire in a state where they can get the most bang for their buck, and military retirees are no different in that regard,” said Senate Majority Leader Bob Duff (D-Norwalk). “When they see that Massachusetts and New York fully exempt military retirement pay from state income taxes, it puts Connecticut at a competitive disadvantage. Losing veterans to these states and others means losing some of the most dedicated volunteers and public servants our communities have. This bill will make Connecticut a more attractive option for our retiring veterans.”

“In the next five years, through 2020, approximately 1.5 million combat veterans will leave active service,” said Michael J. Zacchea, Lieutenant Colonel United States Marine Corps (ret). “I truly believe that increasing the state’s tax exemption of military pensions to 100 percent will serve to keep our state economically competitive and will be an important piece to articulating a comprehensive military-friendly strategy for retirees leaving active service through 2031.”

 

 


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