State Benefit·California·🏛️Tax Benefits

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).

Verified May 12, 2026againstftb.ca.gov

At a glance

Benefit type: Tax Benefits — California
Who it's for: Veterans, Survivors
VA rating needed: No rating requirement
Estimated value: Up to $20,000 exclusion
Where it applies: California
Last verified: May 12, 2026

What is Military Retirement Pay Partial Tax Exclusion?

Military Retirement Pay Partial Tax Exclusion is a California tax benefits benefit for veterans, survivors. Exclude up to $20,000 of military retired pay from California state income tax (tax years 2025-2029 per SB 1, 2025-2026 session). The listed value is Up to $20,000 exclusion.

Who qualifies

VeteransSurvivors

Available to any veteran
California residency

How to apply

Apply through the official California agency.

Open application

Who is eligible

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.

What Military Retirement Pay Partial Tax Exclusion covers

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 for Military Retirement Pay Partial Tax Exclusion

How to apply

Claimed on your California state tax return via the Franchise Tax Board.

Open application Verify at official source

Verified information & sources

Last verified: May 12, 2026

Official source: ftb.ca.gov

Compiled and fact-checked against the official source linked above. Benefit rules and dollar amounts change over time — always confirm current details at the official source before applying. A county Veterans Service Officer (VSO) is a free, accredited advocate who can review your eligibility and help you file at no cost.

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Frequently asked questions about Military Retirement Pay Partial Tax Exclusion

Who qualifies for Military Retirement Pay Partial Tax Exclusion?▾

Military Retirement Pay Partial Tax Exclusion is for Veterans, Survivors; available to any veteran; california residency. See the eligibility details on this page and confirm with the official source before applying.

How much is Military Retirement Pay Partial Tax Exclusion worth?▾

The listed value is Up to $20,000 exclusion. Amounts can change — confirm the current figure at the official source linked on this page.

How do I apply for Military Retirement Pay Partial Tax Exclusion?▾

Apply through the official source linked on this page. A county Veterans Service Officer (VSO) can review your eligibility and help you file at no cost.

Where can I verify Military Retirement Pay Partial Tax Exclusion?▾

Benefit rules and dollar amounts change, so always confirm current details at the official source linked on this page. A free, accredited county or state Veterans Service Officer (VSO) can also verify your eligibility and help you apply.

Other California Tax Benefits

Disabled Veterans Property Tax Exemption (100% Disabled)

$180,671 reduction in assessed value (basic) or $271,009 (low-income) for 100% service-connected disabled veterans.

$1,987-$2,981/year

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