by Madison Hirneisen
Virginia may soon make younger veterans eligible for an income tax subtraction on military retirement pay under a bill that received bipartisan support in the House of Delegates Tuesday.
House Bill 1436 received broad bipartisan support during a floor vote in the House Tuesday, passing out of the chamber in a 98-0 vote. The bill, authored by Del. John McGuire, R-Goochland, would remove the existing 55 and older age restriction for individuals eligible for a military benefits income tax subtraction.
The bill follows the signing of two bills last September that created a state income tax subtraction for recipients of military benefits. The bills allowed a subtraction of up to $10,000 in military benefits for taxable year 2022, $20,000 in 2023, $30,000 in 2024 and $40,000 in 2025. The subtraction was limited to recipients of military benefits who are age 55 and older.
McGuire told The Center Square earlier this month the goal of the bill is to make Virginia more “veteran friendly.” In a House subcommittee earlier this month, McGuire contended the bill will help the commonwealth “be more competitive with other states.”
According to TurboTax, 34 states do not tax military retirement pay – including the eight states that have no state income tax. Several other states tax military retirement partially, while just New Mexico and California follow federal tax rules for retirement pay, according to Military.com.
The bill is expected to cost the state $37.8 million in fiscal year 2024, $33.4 million in fiscal year 2025 and $34.7 million in fiscal year 2026, according to an analysis from the Department of Taxation. Gov. Glenn Youngkin announced interest in removing the age restriction during his budget presentation in December and has included funding in his proposed budget amendments to do so.
In a subcommittee earlier this month, a representative from Veterans Defense Affairs told lawmakers the “administration emphatically supports this legislation.”
“It’s the necessary next step in attracting our military veterans here to Virginia,” said Jordan Stewart, Assistant Secretary of Veterans Defense Affairs. “The age 38 to 55 is really the population we’re trying to attract – those that want to start their next phase of civilian life here with their families, businesses [and] joining our workforce.”
Given that it received bipartisan support in the House of Delegates, the path forward for the bill is looking promising as it heads to the Democrat-controlled Senate. The measure will go before lawmakers on Senate committees in the coming weeks.
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Madison Hirneisen is a staff reporter covering Virginia and Maryland for The Center Square. Madison previously covered California for The Center Square out of Los Angeles, but recently relocated to the DC area.
