Georgia offers a Military Retirement Income Exclusion that allows eligible taxpayers under age 62 to exclude a portion of their military retirement income from Georgia taxable income. This exclusion can significantly reduce or eliminate Georgia income tax on military retirement benefits.
Who Qualifies?
You may qualify for the Georgia Military Retirement Income Exclusion if:
- You receive taxable military retirement income.
- You are under age 62 as of the end of the tax year.
- The military retirement income is included in your federal adjusted gross income (AGI).
If you are 62 or older, you generally should review Georgia's broader Retirement Income Exclusion instead of the Military Retirement Income Exclusion.
Military Retirement Exclusion Amount
Base Exclusion
Qualified taxpayers under age 62 may exclude up to $17,500 of military retirement income from Georgia taxable income.
Additional Exclusion
An additional exclusion of up to $17,500 may be available if the taxpayer has more than $17,500 of earned income.
This means an eligible taxpayer may exclude up to $35,000 of military retirement income if both requirements are met:
- They are under age 62.
- They have more than $17,500 of qualifying earned income.
What Counts as Earned Income?
For purposes of the additional exclusion, earned income generally includes:
- Georgia salary and wages.
- Other Georgia earned income reported on the Military Retirement Income Exclusion worksheet.
The Georgia Schedule 1 worksheet instructs taxpayers to combine:
- Taxable Georgia salary and wages, and
- Other earned Georgia income
to determine whether they exceed the $17,500 earned income threshold.
Married Taxpayers
The exclusion is determined separately for each spouse.
If both spouses receive military retirement income and both meet the eligibility requirements, each spouse may claim their own allowable exclusion amount.
Part-Year Residents and Nonresidents
Part-year residents and nonresidents may still qualify for the Military Retirement Income Exclusion.
Special rules apply:
- They may claim the $17,500 base exclusion against the total military retirement income they received.
- To qualify for the additional $17,500 exclusion, they must meet the earned income requirement using Georgia-source earned income.
How to Claim the Exclusion
Our software will automatically apply the exclusion once a Georgia return is created if applicable. If you need to adjust the military retirement income pulled from your federal return, please follow the steps below.
- State
- Edit Georgia
- Subtractions from Income
- Georgia Military Retirement Exclusion
Example
Example 1
- Taxpayer is age 55.
- Military retirement income: $25,000.
- Georgia wages: $10,000.
Result:
- Eligible for the base exclusion of $17,500.
- Not eligible for the additional exclusion because Georgia earned income does not exceed $17,500.
- Total exclusion: $17,500.
Example 2
- Taxpayer is age 58.
- Military retirement income: $40,000.
- Georgia wages: $30,000.
Result:
- Eligible for the $17,500 base exclusion.
- Eligible for the additional $17,500 exclusion because earned income exceeds $17,500.
- Total exclusion: $35,000.
Key Takeaways
- The Georgia Military Retirement Income Exclusion is available only to taxpayers under age 62.
- Up to $17,500 of military retirement income may be excluded.
- An additional $17,500 exclusion may be available when earned income exceeds $17,500.
- Married taxpayers determine eligibility separately.
- Part-year residents and nonresidents may qualify, but additional exclusion requirements are based on Georgia-source earned income.
- Claim the exclusion using Georgia Form 500, Schedule 1, Page 3.