BILL ANALYSIS Ó
AB 1791
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1791 (Lopez) - As Amended May 12, 2016
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
The bill excludes from gross income, for taxable years beginning
on or after January 1, 2016, and before January 1, 2019,
retirement pay from the federal government for military service
performed in the Armed Forces of the United States, the reserve
AB 1791
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component of the Armed Forces of the U.S., or the National
Guard, and survivor benefits payments, as specified. The
provisions of this bill are contingent upon appropriation for
the Franchise Tax Board (FTB) of administrating the income
exclusion.
FISCAL EFFECT:
Annual General Fund cost pressure of approximately $330 million,
$210 million, and $105 million in FY 2016-17, FY 2017-18, and FY
2018-19, respectively.
COMMENTS:
1)Purpose. The author notes that California has the third
largest population of military retirees in the country, with
an estimated 165,000 retired military personnel. This bill is
intended to create an exclusion from gross income for
retirement pay received for the military service performed in
the US Armed Forced, the reserve component of the US Armed
Forces, or the National Guard.
2)Background. Under federal and state tax law, some income tax
benefits are extended to military personnel or their families.
Military death benefits paid to qualified survivors, military
pay for service in combat zones, and the premium paid into a
survivor annuity account are all excluded from the calculation
of gross income. However, these benefits, while valuable, are
much more limited in scope than the income exclusion proposed
by AB 1791.
3)Related legislation. AB 1275 (Gray) of 2015 and AB 1077
(Anderson) of 2009, similarly proposed to exclude military
retirement pay from the calculation of gross income. AB 1275
AB 1791
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was held in this committee while AB 1077 was held in the
Assembly Committee on Revenue and Taxation.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081