GEORGIA – Veterans who retire and live in Georgia could be getting a tax cut soon. That is, if a bill proposed by State Representative Jesse Petrea passes.
This is good news for Georgia veterans, but bad news for Georgia smokers.
If the bill passes, all military retirement income will not be taxed. The way for this to happen, though, is to increase the Georgia cigarette tax by 28 cents per pack.
increasing the tobacco tax from 37 cents a pack to 65 cents a pack makes this bill revenue neutral.
“About 28 cents is what it should take to get about $120 million to raise the revenue that we will lose by eliminating Georgia income tax on all military retirement income,” Rep. Petrea said.
Petrea said the current tobacco tax raises about $200 million a year, but it costs the state over $500 million a year in Medicaid costs for smoking-related illnesses.
“So right now, 18 percent of Georgians smoke, and so the 82 percent who don’t smoke, quite frankly, are subsidizing those who do to the tune of $300 million a year,” Petrea said.
Petrea said Georgia veterans deserve this perk and it would strengthen the Georgia workforce.
“We need to incentivize veterans who have the skills and the discipline to take good jobs in Georgia,” Petrea said. “We need to incentivize them to stay here when they retire.”
Columbus CPA Jason Pease said right now, it’s “tax advantageous” for Georgia veterans to live elsewhere.
“The state of Alabama has an exemption for this kind of income, Florida and Tennessee do not have the income tax, so Georgia could certainly benefit, the retirees could certainly benefit if this would go into effect,” Pease said.
Pease said Georgia veterans don’t see any type of tax exemption on their retirement income until they’re 62. ‘
This bill would save Georgia veterans of all ages a good chunk of change.
“If this tax exemption bill were to go into effect, then you’d basically be saving 6 percent of your money on your retirement income,” Pease explained. “If you have a retirement income of $50,000, you basically save $3,000 in tax.”
Right now, the Georgia tobacco tax is the 48th lowest in the United States.
The bill would be introduced in the 2016 session of the general assembly in January. If the bill passes, the earliest it can go on the books is July 1 of next year.