Senate overwhelmingly supports income tax exemption for military retirement

OKLAHOMA CITY – Oklahoma could soon join the other 33 states that honor America’s military by not taxing their retirement pay, following the Senate’s unanimous approval of Senate Bill 401 Wednesday. The measure is authored by Air Force veteran Sen. Adam Pugh, R-Edmond, and Sen. Brenda Stanley, vice chair of the Senate Veterans and Military Affairs Committee.

“This is just one more way to support our veterans who have sacrificed so much for our nation. I’ve been working on this legislation for five years, and I’m very excited that the governor, along with my Senate and House colleagues, have pledged their support to get it across the finish line this session,” Pugh said. “I want Oklahoma to be the top destination for America’s heroes. These are highly trained professionals, typically in their forties looking to start a second career, with numerous skills that are desperately needed in our workforce. They can help fill the gap in critical industries like aviation and engineering, which will be an incredible boon for our economy.”

Stanley presented the bill on the floor. Her district includes Tinker Air Force Base, the largest military base in Oklahoma and one of the largest in the nation.

“This is huge for the state of Oklahoma.  We’re an island among states that have already exempted veterans’ military pay from state income tax.  This bill is good for veterans and good for Oklahoma’s economic development efforts,” said Stanley, R-Midwest City. “Typically, when members of the military retire, they begin a second career. They have years of expertise in specialized areas—we can use those people in our workforce, and while their military pension would be exempt, their earnings from their second career will put more tax dollars into our economy. It’s a win-win for military retirees and the entire state.”

Currently, Oklahoma’s approximately 36,000 retired service members can deduct the greater of $10,000, or 75% of their retirement income, from state income tax. Of surrounding states, only New Mexico and Colorado tax military pensions.

SB 401 now moves to the House where Rep. Ryan Martinez, R-Edmond, is carrying the measure.

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For more information, contact:  
Sen. Pugh: (405) 521-5622 or Adam.Pugh@oksenate.gov
Sen. Stanley: (405) 521-5584 or Brenda.Stanley@oksenate.gov