Senator Kelly Seyarto has introduced his first bill of the 2025 – 26 legislative session. SB 1 will benefit Veterans and surviving family members by exempting military retirement income and Survivor Benefits Plans (SBP) from state taxation.

Over 27,000 surviving family members and 141,000 retirees now receive their benefits in California. Military retirement is earned through at least 20 years of service, while SBPs are optional benefits paid out to a surviving spouse or child after the service member’s death. While life insurance payments are tax-free, these payments to widowed spouses and children of deceased service members are subject to state income tax.

Currently, 49 states either partially or fully exempt military retirement and SBP payments, leaving California as the only state in the country fully taxing these earned benefits.

“It is time for California to join the rest of the nation in supporting our Veterans and ensuring their families are not unfairly burdened by taxation,” said Senator Seyarto. “These individuals have given everything to serve our country; we must now do our part to support them. Surely one of the simplest ways we can express our gratitude is not to tax the very compensation we give them for their loss.”

Since 2016, California has experienced a steady decline in recipients of these benefits, losing over 1,000 beneficiaries annually and 2,600 retirees per year. This trend has resulted in over $558 million in federal retirement and SBP payments leaving the state.

By aligning California’s tax policies with those of the rest of the country, SB 1 will help ensure that Veterans and their families are supported and valued for their service and sacrifice.

Kelly Seyarto

– State Senator, 32nd District