Georgia does tax retirement pension income, but a generous exclusion shields a large portion of it from the state’s flat income tax. If you’re 65 or older, you can subtract up to $65,000 of qualifying retirement income per person before the tax rate applies. Between ages 62 and 64, the limit is $35,000 per person. Social Security benefits sit outside that cap and are fully exempt. For a married couple both 65 or older with Social Security plus pension income, Georgia tax often comes out to zero.
How the Retirement Income Exclusion Works
The exclusion is a straight subtraction from your Georgia income before the tax rate applies. Your cap depends on your age as of December 31 of the tax year:1Department of Revenue. Retirement Income Exclusion
- Age 62 through 64: up to $35,000 per person
- Age 65 and older: up to $65,000 per person
- Under 62 and permanently disabled: up to $35,000 per person
The limit is per person, not per household. Each spouse on a joint return qualifies on their own age, so two 65-year-olds can exclude up to $130,000 combined. But each spouse can only apply the exclusion against retirement income attributable to them individually; one spouse cannot borrow the other’s unused room.2Legal Information Institute (LII). Georgia Comp. R. and Regs. R. 560-7-4-.02 – Procedures Governing Retirement Income Exclusion Income from jointly owned property is split 50/50 for this purpose.
The number is a cap, not a flat deduction. A 66-year-old with $50,000 in qualifying retirement income excludes all $50,000 and owes Georgia nothing on it. Only amounts above your limit flow back into taxable income.
What Income Qualifies
Georgia defines qualifying retirement income broadly, which is what makes the exclusion so useful. It covers:1Department of Revenue. Retirement Income Exclusion
- Pension and annuity payments, both private and government
- Distributions from traditional IRAs, 401(k)s, 403(b)s, and similar pre-tax accounts
- Interest and dividend income from savings, CDs, bonds, and stocks
- Capital gains from selling investments or other assets
- Net rental income and royalties
- Up to $5,000 of earned income from wages or self-employment
Investment income counts, which matters for retirees who never had a traditional pension and live on portfolio withdrawals. Someone 65 or older pulling $30,000 from an IRA, $15,000 in dividends, and $10,000 in capital gains can shelter the full $55,000 under one exclusion. The $5,000 earned income allowance means a part-time job or consulting gig doesn’t automatically eat into your tax picture either.
Social Security Is Separately Exempt
Social Security benefits and Railroad Retirement income are fully exempt from Georgia income tax, with no cap and no age test. The taxable portion that appears on your federal return gets subtracted on Schedule 1 of Georgia Form 500.3Department of Revenue. Retirees – FAQ
This exemption runs alongside the retirement income exclusion, not against it. Social Security doesn’t eat into your $35,000 or $65,000 room. A 67-year-old collecting $25,000 in Social Security and $60,000 from a pension excludes the Social Security entirely, then applies the $65,000 cap to shelter the full pension. Georgia tax on that $85,000: zero.
Military Retirement Pay
Military retirees under age 62 have had a separate, smaller break. Veterans younger than 62 could exclude up to $17,500 of military retirement pay, with an additional $17,500 available if the veteran also had at least $17,500 in earned income, for a combined maximum of $35,000.4Georgia General Assembly. Fiscal Note for Senate Bill 31 (LC 50 1003) At 62 and older, military retirees use the standard retirement income exclusion.
Senate Bill 31, introduced in the 2025-2026 session, would exempt all military retirement benefits from Georgia income tax regardless of age, effective for tax years beginning on or after January 1, 2026. The bill covers retirement benefits from service in the U.S. armed forces or reserves with no dollar cap.4Georgia General Assembly. Fiscal Note for Senate Bill 31 (LC 50 1003) Confirm the final status with the Georgia Department of Revenue before relying on it.
Military disability retirement pay that’s excluded from your federal gross income never shows up on your Georgia return at all, because Georgia starts from federal AGI.
Roth Distributions
Qualified Roth IRA and Roth 401(k) distributions aren’t in federal adjusted gross income, so Georgia never sees them. They don’t eat into your retirement income exclusion either, which leaves the full cap available for other income. For retirees whose total retirement income runs well above the exclusion limits, keeping a portion of savings in Roth accounts can meaningfully trim the annual Georgia bill.
Required Minimum Distributions
Federal law requires most people with traditional IRAs, 401(k)s, and similar pre-tax accounts to begin taking minimum withdrawals at age 73. Workplace plans sometimes let you wait until actual retirement, but IRA owners must start by April 1 of the year after turning 73.5Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
RMDs are taxable federally and in Georgia, and they count as qualifying retirement income for the exclusion. Since you’ll be well past 65 when RMDs begin, the $65,000 per-person cap applies, and in early RMD years the exclusion often covers the full distribution.
If you’re 70½ or older, you can direct up to $111,000 per year from an IRA straight to a qualified charity as a qualified charitable distribution. That amount never enters your federal AGI, so Georgia never taxes it, and it still counts toward your RMD.
Moving To or From Georgia
Federal law bars any state from taxing retirement income you earned while working there once you’ve moved away.6Office of the Law Revision Counsel. 4 USC 114 – Limitation on State Income Taxation of Certain Pension Income A pension earned in New York can’t be taxed by New York after you move to Georgia; only Georgia can tax it, and the exclusion applies. The same works in reverse: if you earned your pension in Georgia and retire to Florida, Georgia can’t reach back to tax those payments. Tax follows residency.
If you move mid-year, Georgia taxes you as a part-year resident on income received while you lived in the state, and the retirement income exclusion is prorated for the portion of the year you were a resident.
Claiming the Exclusion
The exclusion isn’t automatic. You claim it on Schedule 1 of Georgia Form 500, which walks through your age, your qualifying retirement income sources, and the exclusion calculation. The result carries to Form 500 as a subtraction from federal AGI.7Department of Revenue. 500 Individual Income Tax Return Use the Form IT-511 instruction booklet for the tax year you’re filing, since line references change year to year.
Withholding and Estimated Payments
Pension administrators typically withhold federal tax based on Form W-4P and may withhold Georgia tax as well, but the withheld amount often ignores the retirement income exclusion. You may end up over-withheld and due a refund, or under-withheld if other income pushes you past the cap.
For retirement income without withholding, including rental income, brokerage capital gains, and interest, Georgia expects quarterly estimated tax payments.8Georgia.gov. Pay Estimated Tax The federal rule parallels it: if you expect to owe at least $1,000 after withholding and credits, quarterly payments are generally required.9Internal Revenue Service. 2026 Form 1040-ES Underpaying can trigger penalties at both levels. Retirees whose income is mostly withheld pensions are usually fine; those living on investment income and IRA withdrawals without withholding should recheck the math each quarter.