Military Retirement Pay Partial Tax Exclusion
Exclude up to $20,000 of military retired pay from California state income tax (tax years 2025-2029 per SB 1, 2025-2026 session).
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Apply directly through the official California agency.
About this benefit
Eligibility
Military retirees (all branches including USPHS and NOAA) with federal AGI under $125,000 (single) or $250,000 (joint filers). Also applies to Survivor Benefit Plan (SBP) annuitants at same income thresholds.
Covers
Excludes up to $20,000 of military retired pay or SBP annuity from California state income tax per year.
Duration
Taxable years beginning on or after January 1, 2025, and before January 1, 2030 (i.e., tax years 2025-2029) per SB 1 (Military Services Retirement and Surviving Spouse Benefit Payment Act, 2025-2026 session).
Estimated savings
Average savings approximately $600/year per LAO analysis; max savings depends on filer's marginal rate.
How to apply
Claimed on your California state tax return via the Franchise Tax Board.
Verified against official source
Last checked 2026-04-30 against www.ftb.ca.gov. Always confirm current rates and rules with the California state agency before applying.
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