State lawmakers are marching at double time to move bills designed to induce returning veterans to live or relocate in Iowa to Gov. Terry Branstad’s desk for his signature.
A Senate Ways and Means subcommittee on Wednesday unanimously approved Senate 303, a hold-over measure from last legislative session that would exempt military retirement pay from state income taxes retroactive to Jan. 1, 2013, for tax years beginning on or after that date.
Branstad included the tax break for veterans who retired from the active-duty military, National Guard and military reserves in his Home Base Iowa initiative that he has made the centerpiece of the 2014 session. He told a Veterans Day at the Capitol rally Wednesday that he is pleased to hear the measure is on a “fast track” in the Legislature.
“That means no state income tax on military retirement anymore,” Branstad said to a thundering cheer from the veterans who filled the Capitol building rotunda during Wednesday’s observance.
Branstad’s legislative liaison, Adam Gregg, told the Senate subcommittee Wednesday that Iowa would join 26 states that already exempt military retirement pay from state income taxes.
Budget documents issued last week with Branstad’s Condition of the State speech indicated the initiative would cost the state about $10 million to exempt military retirement pay from taxation. Iowa is in the final phase of a multi-year effort to end state taxation of Social Security benefits as well.
Branstad told the Veterans’ Day assemblage that the Home Base Iowa effort comes at a critical time when the military is facing “substantial reduction” due to federal cutbacks that will present a “great opportunity” for employers looking to fill jobs with newly discharged military veterans.
“We want to make this really an outstanding landmark session for veterans in the state of Iowa,” the governor said.
Senate File 303 was well-received by veterans who attended Wednesday’s subcommittee meeting.
“I thought about leaving because of the tax,” said retired Army veteran Timothy McLaughlin of Nevada. “It would be a significant factor in the decision whether I stay or go,” he said of the proposed tax exemption.
Kent Hartwig, a lobbyist for the American Legion of Iowa, told the subcommittee members the bill addresses veterans, economic development and skilled workforce issues by assisting veterans who will be trained, motivated and looking for a second career.
Sen. Herman Quirmbach, D-Ames, the subcommittee chairman, said he expected the full Senate Ways and Means Committee to take up the measure as early as Thursday.