Committee kills Spotsylvania lawmaker’s bill phasing out state income tax on military retirees

Feb. 01--A Spotsylvania County lawmaker's bill to phase out the state's income tax on military retirement pay swiftly died this week.

State Sen. Bryce Reeves, a Republican, proposed eliminating the tax over five years for the state's 156,513 military retirees, starting with a 20 percent decrease this year. But the legislation would have put a large dent in the budget, cutting tax revenue by an estimated $116 million next fiscal year and $245.5 million for the fiscal year beginning July 1, 2022, according to the Virginia Department of Taxation.

Sen. Richard Stuart, a Stafford County Republican and member of the Senate Finance Committee that unanimously killed the bill Wednesday, called it "one of the hardest votes I ever had to take."

"But we just simply didn't have the money to do it and still have a viable state budget," said Stuart, who served in the Marine Corps Reserve from 1984 until 1992. He added that the committee is looking into more comprehensive tax reform and wanted to avoid "piecemeal legislation until we put everything in the mix."

The Finance Committee unanimously voted down another bill put forward by Reeves that would immediately eliminate the income tax for veterans with a "100 percent service-connected disability" whose pensions do not exceed 250 percent of the federal poverty level.

Under current Virginia law, only military retirees who received the Congressional Medal of Honor pay no income tax.

A spokeswoman for Reeves, an insurance agent who served in the U.S. Army Reserve for four years, did not immediately return an email and call for comment. Del. Mark Cole, a Spotsylvania Republican and retired Navy reservist, was among the bill's two co-sponsors.

The Fredericksburg region is home to more than 40,000 veterans, according to the U.S. Department of Veterans Affairs, which did not specify how many of them are retired. Traditionally, military personnel must have served at least 20 years to qualify for retirement pay, and many supplement their pensions with full-time jobs with the federal government or government contractors.

Nationwide, the nearly 2 million military retirees--including reservists--receive an average annual pension of $28,824, according to the U.S. Defense Department.

But the pensions can vary greatly by rank, with retired colonels receiving an average of $64,764 as of Sept. 30 2016. Someone making that amount would save more than $3,000 with no income tax.

Virginia's income tax includes a $720 charge and a 5.75 percent levy on all wages above $17,000.

Of the 41 states with an income tax, 14--Alabama, Hawaii, Illinois, Iowa, Kansas, Louisiana, Massachusetts, Michigan, Mississippi, New Jersey, New York, Ohio, Pennsylvania and Wisconsin--do not tax military pensions, according to the National Conference of State Legislatures.

Another 20, including Maryland, offer partial exemptions. Virginia is among seven states with no income tax exemptions for military retirees.

In Story News WidgetC2F278094FACCEA612EE51C5639E1537subscribehttp://www.fredericksburg.com/newslettershttp://www.fredericksburg.com/newsletters

Get the headlines newsletter in your inbox each day with the top stories.

htmlCancelSubscribe

___

(c)2018 The Free Lance-Star (Fredericksburg, Va.)

Visit The Free Lance-Star (Fredericksburg, Va.) at www.fredericksburg.com/flshome

Distributed by Tribune Content Agency, LLC.