Career military retirees in Maryland are finally going to get an extra tax break they long sought exempting more of their pension from state taxes.
There was a back and forth battle between the House and Senate about who should get the tax break, but House and Senate members finally agreed to expand the tax break with no limits on age or income, Sen. Edward Kasemeyer, D-Howard said.
Kasemeyer explained that retired military could exempt the first $5,000 from their state income tax for a net saving of $350 a year. The state will lose $12 million in revenue.
The amount is small, but it?s “a start,” said state Veterans Affairs Secretary George Owings.
The governor had made the measure a top priority because it had been a campaign promise.
“The bill has been in six or seven times,” Owings said, but Ehrlich “is the first governor to put it in the budget.”
The bill sponsored by Sen. John Astle, D-Anne Arundel, had strong bipartisan support, with eight Republicans joining 16 Democrats in co-sponsoring the measure. The tax break won final passage without opposition in both houses.
There was resistance in the House to grant the retired military more tax breaks because they were already much better off financially than most Marylanders.
A 2003 task force to study the financial impact of on the Maryland economy found that there were 42,600 military retirees living in Maryland with a median household income of $71,484, compared to $42,151 for all households in the state.
The retirees have average income of more than $83,000, with $18,000 of that coming from their pensions. The retirees paid approximately $163 million in state and local income taxes.
