This measure deserves the full support of the Colorado legislature and the voters. It certainly has mine!
HB23-1084 is important. It carries a small and reasonable cost that brings advantages to the state well beyond the investment. It should be approved this session.
DECLARATION: Neither this bill nor HB23-1002 will affect me as my retirements are already exempt from Colorado’s income tax. I am a VA-rated 100% disabled veteran and also a 26-year military retiree separated from the Air Force at a 100% medical disability, thus my state income tax is already exempt for other provisions of the law.
At first glance, I believed HB23-1002 for disabled veterans should be a priority over HB23-1084. Instead, I now urge approval of both measures because they are good for veterans and great for Colorado. This year both bills are firmly supported by the United Veterans of Colorado.
Since 2011 I’ve urged legislative action to help other totally disabled veterans and thus have long supported measures such as HB23-1002. Colorado’s constitution currently provides a partial property tax exemption to VA-rated 100% disabled vets but fails to address VA’s second category of disabled veterans who are totally disabled, those the VA rates as “totally disabled for individual unemployability (TDIU.)
HB23-1052 addresses that oversight and supports nearly 3,000 of Colorado’s most seriously and totally disabled veterans whose injuries or illnesses prevent any employment. I expected to strongly favor only this initiative because of the moral imperative of meeting the needs of these vets.
I’ve changed my view. I see both measures as vital legislation for Colorado in 2023, particularly because HB23-1084 is an economic “no-brainer,” bringing much more to Colorado than it costs
Retired military who chose Colorado as their home following active duty do so for many reasons. Clearly, important among them is a favorable treatment of their military retirement income. Colorado currently exempts a modest portion of a military pension; HB23-1084 merely extends it to 2034. This measure pays for itself far beyond its modest cost,
In 2021 28 states exempted all of a military retirement from state income taxes, and that number rose to 32 in 2022. Eleven states, including Colorado, currently offer an exemption for at least some portion of a military retirement. Seven states and the District of Columbia have no military pension exemption. To our disadvantage, Colorado will join that short list in 2024 unless HB23-1084 is approved to continue our partial exemption.
Governments and legislators see the importance of being “veteran-friendly” but unfortunately Colorado only ranks a modest 27th among the states.
Being “military-friendly” recognizes a retiree’s long service to the state and nation and it makes great economic sense. Thanks in part to the current partial exemption provided military pensions in Colorado, our 50,000 retired military have brought their steady retirement income. Most brought their military experience, skills and knowledge to join our workforce or start their own businesses as second careers. Servicemembers already here have been encouraged to stay after leaving active service, and others selected our state as their new home, in part because of the current partial exemption for military pensions.
States value retired military members because they bolster the state economy by bringing retirement income and non-taxed VA benefits, like the GI Bill. Typically, their federal benefits leave them independent of state support services. According to a California study considering state taxation of military pensions, researchers determined there would be significantly more jobs, millions added to total personal income, billions added to gross state product and to business sales if military pensions were exempted.
Another recent study by the Towson University Regional Economic Studies Institute (RESI), found that “If (the state) does not exempt military retired pay from state income taxes … countless other service members and their families will opt to retire to military retiree-friendly states.”
The Towson study also stated that when military retirees reenter the workforce, their taxable income generates an economic impact in addition to that of their military pensions. Their second careers can last from 15 to 20 years. Military retiree household spending — groceries, rent, mortgage payments, automobile purchases and recreation spending, to name a few items — also benefits the economy. As average to above-average wage earners, these are the folks Colorado wants to attract and keep.
HB23-1084 is a golden opportunity to increase state revenues by passing legislation that would continue to partially exempt military retired pay from state income tax. This legislation would help stem a migration of skilled and experienced personnel who retire from the military and leave Colorado because of state income tax higher than other states.
Military vets are good neighbors who pay their bills, volunteer in the community and have an appreciable level of discretionary income. Most other states have learned this and realize that exempting military pensions from state income taxes means losing a little in revenue but building a stronger fiscal base by increasing the total number of state taxpayers. States that understand the economics of exempting military retired pay reap the benefits that come with creating an attractive fiscal landscape.
We need to keep our “landscape” military-friendly with HB23-1084.
