Georgia Military Retirement Income Exclusion

Georgia taxes personal income and then excludes part of retirement pay. The Department of Revenue retirement page, which still states the rule in force for a 2026 return, works like this. A taxpayer under 62 may exclude $17,500 of military retirement income. A further $17,500 is available when that taxpayer has more than $17,500 of earned income in Georgia. Each spouse qualifies or fails on that spouse's own income. A taxpayer age 62 through 64 uses the general retirement exclusion of up to $35,000. A taxpayer age 65 or older uses the general retirement exclusion of up to $65,000. The general exclusion can include pensions, interest, dividends, rent, capital gains, royalties, and up to $5,000 of earned income. On a joint return, each spouse who receives retirement income can claim the exclusion. House Bill 266, signed in 2025 and summarized by the Department of Revenue, changes the military piece later. Section 1 lets an individual under 65 exclude up to $65,000 of retirement benefits from service in the armed forces or the reserve components. Each spouse on a joint return may claim that exclusion separately. It cannot be stacked with the general retirement exclusion in Code section 48-7-27(a)(5). The department's legislative summary says section 1 takes effect January 1, 2027, and applies to taxable years beginning on or after that date. It does not apply to the 2026 return. The Department of Veterans Service page still describes the under-62 amounts and does not yet describe the 2027 change. House Bill 463 of 2026, Act 465, the Georgia Economic Growth and Tax Relief Act, moved the general exclusion again. For taxable years beginning on or after January 1, 2027, the exclusion for a taxpayer 65 or older rises from $65,000 to $70,000; the $35,000 exclusion for ages 62 to 64 and the military exclusion for those under 65 in House Bill 266 are unchanged. So from 2027 a military retiree under 65 excludes up to $65,000 under the military provision, and at 65 moves to the general exclusion of up to $70,000. VA disability compensation is excluded from federal adjusted gross income. Georgia taxable income starts from that federal figure, so the compensation is not in the Georgia base. That exclusion is not the retirement subtraction.