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AB-528 Personal income taxes: exclusion: military retirement pay.(2017-2018)

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Date Published: 04/03/2017 09:00 PM
AB528:v97#DOCUMENT

Revised  June 20, 2017
Amended  IN  Assembly  April 03, 2017
Amended  IN  Assembly  March 14, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 528


Introduced by Assembly Member Gray
(Coauthors: Assembly Members Chávez, Mathis, Ridley-Thomas, and Voepel)
(Coauthors: Senators Anderson, Berryhill, and Newman)

February 13, 2017


An act to add and repeal Section 17132.9 to of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 528, as amended, Gray. Personal income taxes: exclusion: military retirement pay.
The Personal Income Tax Law provides various exclusions from gross income in determining tax liability, including an exclusion for combat-related special compensation and death benefit payments received by a surviving spouse or other beneficiary designated by a military veteran, as prescribed, who dies or is killed in the performance of duty, as provided.
This bill, for taxable years beginning on or after January 1, 2018, and before January 1, 2023, would exclude from gross income specified percentages of retirement pay received by a taxpayer with gross income that, excluding that retirement pay, does not exceed $50,000, from the federal government for military service performed in the Armed Forces of the United States, the reserve component of the Armed Forces of the United States, or the National Guard.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 17132.9 is added to the Revenue and Taxation Code, to read:

17132.9.
 (a) For each taxable year beginning on or after January 1, 2018, and before January 1, 2023, gross income shall not include qualified retirement pay received by a qualified taxpayer from the federal government for military service performed in the Armed Forces of the United States, the reserve component of the Armed Forces of the United States, or the National Guard.
(b) For purposes of this section, “qualified section:
(1) “Qualified retirement pay” means all of the following:

(1)

(A) One hundred percent of retirement pay received in the first 12-month period after the taxpayer leaves military service. If the taxpayer subsequently performs military service, this paragraph subparagraph shall also apply to the first 12-month period after the taxpayer leaves that subsequent service, as long as subsequent military service is performed in the same service branch, active duty, reserve, or the National Guard, as the original military service. For purposes of this paragraph, subparagraph, a performance of military service means a tour of duty lasting no less than six months.

(2)

(B) Eighty percent of retirement pay received in the 12-month period immediately subsequent to the period described in paragraph (1). subparagraph (A).

(3)

(C) Sixty percent of retirement pay received in the 12-month period immediately subsequent to the period described in paragraph (2). subparagraph (B).

(4)

(D) Forty percent of retirement pay received in the 12-month period immediately subsequent to the period described in paragraph (3). subparagraph (C).

(5)

(E) Twenty percent of retirement pay received in the 12-month period immediately subsequent to the period described in paragraph (4). subparagraph (D).
(2) “Qualified taxpayer” means a taxpayer with gross income that, excluding retirement pay received by the taxpayer from the federal government for military service performed in the Armed Forces of the United States, the reserve component of the Armed Forces of the United States, or the National Guard, does not exceed fifty thousand dollars ($50,000).
(c) This section shall remain in effect only until December 1, 2023, and as of that date is repealed.

SEC. 2.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
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REVISIONS:
Heading–Lines 2 and 3.
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