SB 188 – Exempting Military Pensions from State Income Tax

A 2019 Pew Research survey found that 72% of all adults wanted to see greater spending on veterans’ benefits and services. Currently, Delaware is one of 16 states that partially taxes military pensions. Under state tax laws, $2,000 of all pension income is considered exempt from state taxes for individuals under the age of 60, rising to $12,500 of all pension and eligible retirement income, including military pensions, for those age 60 and older. 

According to the AARP, of the 41 states that have a state income tax, 21 fully exempt military pensions from taxation, including Pennsylvania and New Jersey. 

Senate Bill 188 would have Delaware gradually phase in an exemption for military pensions from the state income tax, starting at 25% of the individual’s military pension in 2022. The exemption would then increase to 50% in 2023, 75% in 2024, and reach 100% of an individual’s military pension in 2025. 

Under SB 188, a military pension is defined as a pension received as a result of an individual’s service in the armed forces of the United States, including the National Guard.

SENATE BILL 176 SPONSORS	YES VOTES	NO VOTES
Mantzavinos, Ennis, Brown, S.McBride, Sokola, Lopez, Pettyjohn
Chukwuocha, Bolden, Brady, Mitchell, Ramone, Hensley, D.Short, M.Smith, Yearick
CURRENT STATUS — Senate Banking, Business & Insurance 6/15/21

“Honoring and taking care of our veterans is something we can all agree on,” said Sen. Spiros Mantzavinos. “Americans of all political persuasions put this issue right at the top of our national priorities. That’s something that deserves a response, not just in Washington but at the state level, too. I’m proud to lead that effort, and I look forward to getting this bill approved and enacted to help the brave men and women who have dutifully served our country.”