Stamford State Senator Pushes for Major Tax Break for Veterans

State Senator Carlo Leone (D-Stamford) and Senate Democrats on Tuesday unveiled their plan to deliver a major tax break for retired veterans by providing a 100% exemption from the state income tax for federally taxable military retirement pay.

Current law in Connecticut provides for a 50% exemption of federal retirement pay to retired members of the U.S. Army, Navy, Air Force, Marines, Coast Guard, and Army and Air National Guard.

“Nearly 11,000 veterans in Connecticut benefit from the current partial tax exemption we offer,” said Sen. Leone. “As a veteran and former Chair of the Veterans’ Affairs Committee, I’ve seen the economic challenges that retired military personnel can face. This legislation will give additional economic relief to veterans, providing financial security for those living on fixed incomes and an incentive for those transitioning from military to civilian life to grow their families here in Connecticut.”

“Most people would like to retire in a state where they can get the most bang for their buck, and military retirees are no different in that regard,” said Senate Majority Leader Bob Duff (D-Norwalk). “When they see that Massachusetts and New York fully exempt military retirement pay from state income taxes, it puts Connecticut at a competitive disadvantage. Losing veterans to these states and others means losing some of the most dedicated volunteers and public servants our communities have. This bill will make Connecticut a more attractive option for our retiring veterans.”

Many other states already offer a full exemption for military retirement pay. Of the states with an income tax 13 offer a 100 percent exemption, including Massachusetts and New York. The federal government currently exempts portions, and in some cases all of military retirement pay for disabled veterans from the federal income tax.

This existing Connecticut exemption benefits approximately 11,000 Connecticut veteran taxpayers each year, resulting in $3.9 million in foregone revenue in fiscal year 2014 and $4 million in fiscal year 2015. Increasing the exemption to 100 percent would roughly double those figures.

“In the next five years, through 2020, approximately 1.5 million combat veterans will leave active service,” said Michael J. Zacchea, Lieutenant Colonel United States Marine Corps (ret). “I truly believe that increasing the state’s tax exemption of military pensions to 100 percent will serve to keep our state economically competitive and will be an important piece to articulating a comprehensive military-friendly strategy for retirees leaving active service through 2031.”

Greg Smith, State Commander of the Veterans of Foreign Wars Department of Connecticut agrees.

“The young men and women who join our nation’s military services do not in general do so with even a brief thought about someday being a retired soldier, sailor, airman, or Marine. Service in our Armed Forces, however difficult or dangerous, is a relatively brief experience for most of our country’s warriors,” Smith said.

“When our state loses them at the peak of their earnings potential, we lose much more than their continuing contribution to Connecticut sales and property taxes, we lose the volunteer and community work.

“For those of us who chose a full military career, I assure you we envisioned no pot of gold at the end of a rainbow. It is no secret that military pay and pensions are low, and thus very worthy of efforts at protection. The Veterans of Foreign Wars thanks the Senate Democrats for recognizing the value military retirees bring to communities throughout Connecticut.”

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Photo: Patch file photo.