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OKLAHOMA CITY (KFOR) – The Oklahoma Senate gave its approval to a bill that would exempt military members’ retirement pay from income tax.

Senate Bill 401 is authored by Senator Adam Pugh, R-District 41, who is an Air Force veteran and Senator Brenda Stanley, R-District 42, who is the 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,” said Sen. Pugh. “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.”

“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 Sen. Stanley. “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.”

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Oklahoma currently has around 36,000 retired service members that can deduct the greater of $10,000 or 75% of their retirement income from state income tax. 

SB401 passed the full Senate on March 9, 2022 with a 43-0 vote. It will now advance to the House for consideration.