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S 3534

Exempts compensation for active military service from inclusion in a resident's adjusted gross income

2025 Regular Session Introduced by Rob Ortt

Excludes active military service compensation from a resident's state AGI, boosting after-tax income for service members and reducing state revenue.

REFERRED TO BUDGET AND REVENUE
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Bill Summary · S 3534

Summary of Senate Bill S 3534

Overview

Senate Bill S 3534 would exempt compensation received for active military service from a resident’s state-adjusted gross income (AGI). The bill is currently in the Budget and Revenue committee, with the sponsor listed as Senator Robert Ortt (primary). It was introduced on January 28, 2025.

What the bill would do (Key Provisions)

  • Exemption from AGI: The bill would exclude compensation earned for active military service from a resident’s calculation of adjusted gross income for state tax purposes.
  • Administrative changes: If enacted, the bill would likely necessitate updates to state tax forms and instructions to reflect the new exclusion, and guidance for applying the exemption to active-duty pay as part of the resident tax return.
  • Scope: The provision targets compensation specifically tied to active military service; the precise definitions and eligible components (e.g., base pay, allowances, bonuses) would be set forth in the enacted text.

Who would be affected

  • Primary beneficiaries: Residents who receive compensation for active military service and report that compensation as part of their state income tax filing.
  • Potential indirect effects: Taxpayers’ after-tax income could increase for those serving on active duty, and state revenue could be affected accordingly.

Procedural and timeline aspects

  • Introduction date: January 28, 2025.
  • Legislative path: Referred to the Budget and Revenue committee on January 28, 2025 (the bill shows two identical entries for the same action, indicating an initial referral in both formal tracks or a clerical duplicate).
  • Current status: Awaiting consideration by Budget and Revenue; no floor action or enacted status indicated in the material provided.

Fiscal and policy considerations

  • Revenue impact: Excluding active military compensation from AGI would reduce state taxable income for affected residents, which would in turn reduce state tax receipts. The magnitude would depend on how much compensation qualifies under the bill and how many residents it covers.
  • Budgetary review: Because the bill is assigned to Budget and Revenue, analysts will assess the cost or revenue impact and any administrative costs associated with implementing the exemption.

Related legislation

  • Several Assembly (A) and Senate (S) bills from prior sessions appear related to this theme, including A 3775, A 335, A 1199, A 4006, A 6005, A 1616, A 1956, S 5996, and S 6581, suggesting ongoing interest in military-related tax exemptions across sessions.

Sponsor

  • Primary sponsor: Senator Robert Ortt.

Next steps for readers

  • Monitor committee activity in Budget and Revenue to see whether the bill advances, is amended, or is scheduled for floor action.
  • Review the enacted text for precise definitions (what constitutes “compensation for active military service”) and any effective dates or transition rules.
  • Consider fiscal analyses or fiscal notes released by the Budget and Revenue committee for expected revenue impact and administrative considerations.

Compiled from official sources — confirm details with the bill’s official record.

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