For the last eight years, Rep. Jesse Petrea (R-Savannah) has been trying to get military retirees a tax cut. Finally, the legislation is heading towards overwhelming bipartisan passage.
To military retirees under the age of 62 who have served for more than 20 years, the bill would mean $17,500 off of their taxes annually. And since military retirees are typically around 40 years old, they usually get another job elsewhere.
Petrea’s bill takes this into consideration too: if retirees continue to work, they get an additional $17,500 exemption on top of that for their regular income, up to a total of $35,000.
To Petrea, it’s a moment of pride.
“People retiring after 42 have a lot of years left to work. Well, the No. 1 issue we hear from industry and business in this state is they can’t hire people who want to work,” Petrea said. “What better way to incentivize patriotic, industrious, skilled, disciplined people to stay here and work?”
When Gov. Brian Kemp gave his state of the state address in January, he laid out his legislative priorities for the coming year, bolstered by Georgia's $3.7 billion surplus. Among those was this bill, which Petrea has been carrying for most of his career as a representative.
Credit: Courtesy Georgia House of Representatives
Credit: Courtesy Georgia House of Representatives
“We’re doing so well with our budget. We believe we have the ability to cut taxes, and as we consider that, I want to do this small carve-out, where we take those who have served a career, a lifetime of military service.”
The price tag for HB 1064 is an estimated $60 million chunk of the state budget annually. And that’s dialed back from Petrea’s past attempts to get it passed.
In previous iterations of the bill, Petrea wrote away taxes on military retirement in Georgia altogether. But he credits Kemp for this bill’s $17,500 and $35,000 caps.
“Originally, it would’ve eliminated all military retirement income taxes. My proposal would not have capped it,” Petrea said. “But the governor’s chosen, and I would say wisely, to be cautious and make it [capped], to make sure we don’t spend too much in our budget.”
'Competitive disadavantage'
Petrea says if HB 1064 passes, Georgia will do away with its “competitive disadvantage” to its neighboring states. He points towards military retirees who work at Gulfstream. Without Petrea’s bill, they can save a portion of their retirement income just by living across the border in South Carolina, a state that has a similar law already on the books.
And Petrea says that’s not good for the state.
“We have now 12,000 people working at Gulfstream. A lot of those people, about 25% of those who work there, are military retirees,” Petrea said. “Many of those people live across the border because they save 5.75% of their income.”
Just across the river in South Carolina, military retirees aged 65 and older can deduct up to $30,000 of military retirement income. And like Petrea’s bill, if they still work another job, they can deduct up to $17,500 of their earned income as well.
To the west of Georgia, Alabama exempts military retirement income entirely. Tennessee and Florida military veterans also don’t pay income tax.
King's Bay Submarine Base and Moody Air Force Base are near the Florida border. Fort Benning is right on the Alabama line. Fort Gordon in Augusta and Fort Stewart and Hunter Army Airfield in Savannah are both close to the South Carolina line.
All these bases border states that, as of now, save military retirees more money on retirement income than they would in Georgia.
Florida, specifically Jacksonville, was the initial plan for James Miller, a born-and-raised Savannahian who retired in 1984 after serving in the Army for a little over 21 years.
He worked as an infantryman during his two Vietnam deployments: He was shot during his first tour in 1967, then went back again for another tour in 1971. After retirement, he worked with American Legion Post 500 and spearheaded the creation of the Vietnam Veterans Memorial placed in Emmet Park.
After he retired and was looking for a place to live, Miller says Florida was an attractive option due to their total tax exemption for military retirement income, but his mother Katie Miller was aging here, and so, he decided to move back to Sandfly instead.
“This was home,” Miller said.
Miller doesn’t regret his choice to move home, and he lives here to this day, but he says when it comes to benefits for retired military, “Georgia doesn’t give a lot,” Miller said.
“Benefits are very few and far between here for the veterans, so I think this is a very good move on Mr. Petrea's part,” Miller said. “And not only will it help veterans, it'll help the whole state.”
Bipartisan approval
Currently, the bill has flown through the legislative process with relative ease, which wasn’t what Petrea was expecting. Before the first House vote on the measure, Petrea said he expected there to be a few no votes.
But when the vote screen lit up in the House, there was no red to be seen. Instead, there were 161 “Yes” votes, a rare case of overwhelming bipartisan support.
As of March 15, the bill had been favorably reported by a Senate committee, and was back on the Senate floor to be read a second time.
If the bill passes the Senate vote, it’ll go to the governor’s desk for a signature.
To Petrea, it’ll be a step forward in building a robust economic future for Georgia. He says when businesses move here, they’ll need disciplined, hard workers. And Petrea says military retirees often fit that bill.
“At the end of the day, we see our Georgia budget getting bigger and bigger, people and industries continue to move here and grow. We’ve created a state that drives people here, obviously — a million people in 10 years,” Petrea said. “We believe we have the ability to sustain this going forward.”
Will Peebles is the enterprise reporter for Savannah Morning News. He can be reached at wpeebles@gannett.com and @willpeeblessmn on Twitter.
This article originally appeared on Savannah Morning News: After years of trying, Savannah Rep. Petrea's military retirement tax cut bill likely to pass
The Latest
Featured
