2015 End of Session Wrap Up: Tax & Revenue – Retirement Income of Military and First Responders

This post summarizes the status of tax and revenue bills related to the retirement income of military and first responders that MACo took a position on during the 2015 General Assembly Session.

Hometown Heroes: HB 99/SB 115 would provide a $10,000 income tax subtraction modification for individuals who are between the ages of 50 and 65 years old and receive retirement income from employment as a law enforcement officer; correctional officer; or fire, rescue, or emergency services personal.

HB 488/SB 594, introduced on behalf of the Administration, would provide a subtraction modification equal to the amount of retirement income received for individuals who are at least 50 years of age and receive retirement income from employment as a law enforcement officer; or fire, rescue, or emergency services personal. The subtraction modification would be phased-in over four years beginning with tax year 2015.

MACo opposed these bills as they would have resulted in a significant loss in local revenue without any local action or input. MACo would prefer approaches that provide local governments the autonomy to determine the best way to provide tax incentives, rather than mandate reductions in local revenue sources.

FINAL STATUS: HB 99 and HB 488 were heard by the House Ways and Means Committee, but no further action was taken. SB 115 was heard by the Senate Budget and Taxation Committee, but no further action was taken. SB 594 was voted unfavorable by the Senate Budget and Taxation Committee.

MACo Testimony HB 99/HB 488
MACo Testimony SB 115 and SB 594 

Military Retirement IncomeHB 482/SB 592, introduced on behalf of the Administration, would have fully exempted military retirement income from the State income tax over a four-year time frame. SB 592, as amended, would expand an existing military retirement income tax subtraction modification from $5,000 to $10,000 for military retirees at least 65 years of age.

HB 714 would expand an existing subtraction modification under the State income tax for military retirement income from $5,000 to $10,000 for all military retirees.

In their original form, MACo opposed these bills as they would have resulted in a significant loss in local revenue without any local action or input. MACo would prefer approaches that provide local governments the autonomy to determine the best way to provide tax incentives, rather than mandate reductions in local revenue sources.

Once amended, MACo withdrew its opposition and took no position on SB 592. MACo viewed the amended version of SB 592 as a more reasonable approach for addressing this issue and it minimized the revenue loss to the State and local governments. MACo also took no position on SB 31, which would expand the existing military retirement income tax subtraction modification from $5,000 to $10,000 for military retirees at least 65 years of age.

FINAL STATUS: HB 482 and HB 714 were heard by the House Ways and Means Committee, but no further action was taken. SB 592 was amended to expand an existing military retirement income tax subtraction modification from $5,000 to $10,000 for military retirees at least 65 years of age and achieved final passage on the last day of the session.

MACo Testimony HB 482 and HB 714
MACo Testimony SB 529 as introduced and SB 592 as amended

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