Providing an exemption from the computation of the individual income tax of certain amounts of retirement income and including retroactive applicability provisions

This bill relates to the exclusion of retirement income from the computation of net income for purposes of the individual income tax. Under current law, a taxpayer may exclude all retirement pay, including certain survivor benefits, received from the federal government for military service performed in the armed forces, the armed forces military reserve, or national guard. In addition, a taxpayer who is disabled, who is at least years of age, or who is the surviving spouse or other specified survivor of that qualifying taxpayer, may exclude a maximum of $6,000 of other retirement income ($12,000 for married couples). 7(31) because the bill provides for a complete exclusion of such retirement income. The bill phases in over a five-year period the complete exclusion from the individual income tax of a taxpayer’s retirement income remaining after the two exclusions referenced above. excluded for tax years beginning in 2021, 2022, 2023, and 2024, is percent, percent, percent, and percent, respectively. For tax years beginning in 2025 or later, 100 percent of a taxpayer’s retirement income will be excluded from the individual income tax.5, and further provides that any retirement income excluded from the individual income tax will not be added back to these calculations for tax years beginning in 2025 or later. The bill defines “retirement income” for purposes of the exclusion. The bill applies retroactively to January 1, 2021, for tax years beginning on or after that date.