Does Georgia Still Tax Military Retirement Pay?

Yes, Georgia does tax military retirement pay, but only the portion that exceeds an age-based exclusion ranging from $17,500 to $65,000. That is set to change: Senate Bill 31, introduced in the 2025–2026 legislative session, would fully exempt military retirement benefits from Georgia income tax for all tax years beginning on or after January 1, 2026.¹

What Changes in 2026

Senate Bill 31 removes every age threshold and income cap for military retirement pay received from service in the U.S. armed forces or reserve components.¹ The bill carries an effective date of July 1, 2025, with the tax exemption applying to tax years beginning on or after January 1, 2026.²

The fiscal note for SB 31 folds Survivor Benefit Plan payments into its revenue projections alongside retirement pay, which indicates the full exemption is intended to reach SBP annuities as well.² If the bill takes effect as written, a military retiree of any age owes zero Georgia income tax on a pension no matter the amount and no matter what other income they have.

Passage status may lag in some online sources. Before filing a 2026 return, check the Georgia Department of Revenue website for current guidance. If SB 31 has not taken full effect by then, the tiered exclusion still governs.

The Current Exclusion by Age

Until the full exemption kicks in, Georgia lets military retirees subtract part of their pension from state taxable income. The amount depends on age, and for younger retirees, on whether they also earn income from a Georgia job. Military retirement pay is reported on IRS Form 1099-R, and the taxable portion shown there is the starting point for the Georgia calculation.³

Under Age 62

A military retiree under 62 can exclude up to $17,500 of military retirement income. A second $17,500 exclusion is available if the retiree also has more than $17,500 in Georgia earned income during the same tax year.⁴ A working retiree who clears that threshold can therefore exclude up to $35,000 of pension income.⁵ Reserve drill pay and Guard wages earned in Georgia count toward the earned-income threshold.

Each spouse qualifies independently. If both spouses receive military retirement income and both meet the earned-income requirement, each claims a separate exclusion.⁵

Ages 62 Through 64

At 62, the military-specific exclusion merges into Georgia’s broader retirement income exclusion. Retirees in this bracket can exclude up to $35,000 of total retirement income regardless of whether they have earned income.² That $35,000 cap covers all retirement sources combined: the military pension, IRA distributions, 401(k) withdrawals, private annuities. If you draw both a military pension and a civilian pension, the exclusion applies to the combined total, not each stream.

Age 65 and Older

At 65 the ceiling rises to $65,000 of total retirement income.² The pooling rule still applies: $65,000 is a single cap across every retirement income source. For most enlisted and mid-grade officer retirees, this effectively zeros out Georgia tax on pension income. Higher-ranking retirees with pensions above $65,000 still owe state tax on the overage.

Permanent and Total Disability

A taxpayer who is permanently and totally disabled can claim the exclusion regardless of age. Georgia treats these taxpayers the same as those age 62 or older for purposes of the retirement income exclusion.⁵ A 45-year-old retiree with a qualifying rating can therefore reach the $35,000 tier rather than being held to the under-62 limit. Schedule 1 asks for documentation of the disability type and date.

Disability Retirement, VA Pay, SBP, and Combat Pay

Military disability retirement pay, including Chapter 61 medical retirements, follows a different path from longevity retirement. Disability retirement benefits received as compensation for injury or sickness from active service are excluded from federal income. Because Georgia starts its tax calculation from federal adjusted gross income, that pay never reaches the Georgia return. The exclusion is not subject to the age-based caps, so the $17,500 or $35,000 slot remains available for other taxable retirement income.

Department of Veterans Affairs disability compensation and pension payments are likewise excluded from federal gross income, which carries straight through to Georgia.⁶ VA grants for specially adapted housing and vehicles fall under the same treatment.

Survivor Benefit Plan payments to a spouse or other beneficiary are generally taxable in Georgia under current law. The surviving beneficiary can claim the retirement income exclusion based on their own age, using the $35,000 or $65,000 cap. If SB 31’s full exemption takes effect, the fiscal analysis suggests SBP payments would also become fully exempt.²

Active duty pay earned in a federally designated combat zone is excluded from federal gross income. That exclusion flows through to Georgia automatically. No separate state claim is required.

Claiming the Exclusion on Your Georgia Return

The exclusion is not entered on the main Form 500. It is calculated on Schedule 1, which adjusts your federal adjusted gross income. Military retirees under 62 report the exclusion on Schedule 1, Line 7b for the taxpayer and Line 7e for a spouse, after completing the military retirement income exclusion worksheet on page 3 of Schedule 1.⁷

The net adjustment from Schedule 1, Line 14, then carries to Line 9 on page 2 of Form 500.⁷ Skipping Schedule 1 or putting the wrong figure on Line 7b taxes the full pension at Georgia’s flat rate. If you are claiming the exclusion on the basis of a permanent and total disability, Schedule 1 also requires documentation of the disability type and date.

Retirees 62 and older do not use the military-specific lines. Their pension is included in the general retirement income exclusion calculated elsewhere on Schedule 1. If SB 31’s full exemption takes effect for 2026, the Department of Revenue will likely update Schedule 1 with new reporting for the complete exemption, so pull the current year’s Form 500 and Schedule 1 from the Georgia Department of Revenue site before you file.⁵

1
Georgia General Assembly. Senate Bill 31 (LC 50 1003)
2
Georgia General Assembly. Fiscal Note for Senate Bill 31 (LC 50 1003)
3
Internal Revenue Service. About Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
4
Justia Law. Georgia Code 48-7-27 – Computation of Taxable Net Income
5
Georgia Department of Revenue. Retirement Income Exclusion
6
Internal Revenue Service. Veterans Tax Information and Services – Section: Benefits Excluded From Taxable Income
7
Georgia Department of Revenue. GA500 Individual Income Tax Return