hua7450 · Oct 20, 2026 · Oct 12, 2026 · Oct 13, 2026 · Oct 14, 2026 · Oct 15, 2026
diff --git a/changelog.d/wire-military-retirement-pay.fixed.md b/changelog.d/wire-military-retirement-pay.fixed.md
@@ -0,0 +1,13 @@
+Wire military retirement pay and military retirement pay survivors to federal gross income (`irs_gross_income`), person `market_income`, household `market_income_sources`, SNAP unearned income, and SSI unearned income. Add new person-level `military_retirement_income` variable summing retiree and survivor pay. Update state tax calculations and exclusions across all affected states to conform with federal AGI inclusion and statutory state treatment:
+- State military retirement and survivor subtractions added or updated in AR, AZ, CA, CO, CT, DC, DE, GA, HI, IA, ID, IL, IN, KS, KY, LA, MA, MD, ME, MI, MN, MO, ND, NE, NJ, NM, NY, OH, OK, OR, PA, RI, UT, VA, VT, WI, WV.
+- Fix Georgia double-counting under O.C.G.A. § 48-7-27(a)(5)(E) and Rule 560-7-4-.02(3).
+- Model California 2025–2029 military retirement and SBP exclusion under R&TC §§ 17132.9–17132.10.
+- Model Indiana military retirement deduction under IC 6-3-2-4.
+- Model DC survivor benefits exclusion for age 62+ under D.C. Code § 47-1803.02(a)(2)(N)(ii).
+- Update Michigan retirement worksheets to account for military survivor benefits.
+- Fix Pennsylvania Schedule SP eligibility income by excluding military retirement pensions while retaining survivor benefits per PA-40 SP instructions.
+- Add military retirement and survivor pay back to total income for Massachusetts Senior Circuit Breaker credit under M.G.L. c. 62 § 6(k)(1).
+- Prevent Maryland pension subtraction double-counting under § 10-209(d)(1) by measuring excess military income against the person's actual capped military subtraction under § 10-207(q).
+- Fix New Jersey 529 deduction income eligibility test to evaluate NJ gross income (`nj_agi`) rather than federal AGI.
+- Restrict subtractions and eligibility income calculations in DC, IN, PA, and WI to tax unit filers to prevent dependent income leakage, leaving out dependents' military amounts, PA dependents' alimony and tax-exempt interest, and WI dependents' state and local tax refunds.
+- Update variable docstrings and references referencing IRC § 61(a)(10) and IRS Pubs 525/575.
diff --git a/policyengine_us/parameters/gov/household/market_income_sources.yaml b/policyengine_us/parameters/gov/household/market_income_sources.yaml
@@ -15,6 +15,7 @@ values:
   - dividend_income
   - pension_income
   # Pension income includes annuities and endowment contracts
+  - military_retirement_income
   - debt_relief
   # Income from estates and trusts (Schedule E Part III), including income
   # in respect of a decedent received through an estate or trust.

diff --git a/policyengine_us/parameters/gov/irs/gross_income/sources.yaml b/policyengine_us/parameters/gov/irs/gross_income/sources.yaml
@@ -43,6 +43,9 @@ values:
     - taxable_alimony_income
     # Taxable state and local income tax refunds (Schedule 1 line 1 / IRC § 111).
     - salt_refund_income
+    # Military retirement pay and survivor benefit plan payments (IRC § 61, Form 1040 line 5b).
+    - military_retirement_income
+
 
 metadata:
   unit: list

diff --git a/policyengine_us/parameters/gov/ssa/ssi/income/sources/unearned.yaml b/policyengine_us/parameters/gov/ssa/ssi/income/sources/unearned.yaml
@@ -10,6 +10,7 @@ values:
     - workers_compensation
     - total_unemployment_compensation
     - retirement_distributions
+    - military_retirement_income
     - gi_cash_assistance
     # (b) Alimony and support payments.
     - alimony_income

diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/individual.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/individual.yaml
@@ -15,7 +15,7 @@ values:
     - ar_taxable_capital_gains_indiv # Line 14
     - taxable_ira_distributions # Line 16, or Lines 17A/17B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 17A/17B after age 59 1/2
-    - military_retirement_pay # Line 17A/17B
+    - military_retirement_income # Line 17A/17B
     - taxable_pension_income # Line 17A/17B
     - taxable_disability_benefits # Line 17A/17B
     - rental_income # Line 18
@@ -41,7 +41,7 @@ values:
     - ar_taxable_capital_gains_indiv # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17 (Lines 17A/17B on the 2018 form)
+    - military_retirement_income # Line 17 (Lines 17A/17B on the 2018 form)
     - taxable_pension_income # Line 18A/18B
     - taxable_disability_benefits # Line 18A/18B
     - rental_income # Line 19
@@ -61,7 +61,7 @@ values:
     - ar_taxable_capital_gains_indiv # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17
+    - military_retirement_income # Line 17
     - taxable_pension_income # Line 18A/18B
     - taxable_disability_benefits # Line 18A/18B
     - rental_income # Line 19
@@ -80,7 +80,8 @@ values:
     - ar_taxable_capital_gains_indiv # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17
+    - military_retirement_income # Line 17
+
     - taxable_pension_income # Line 18A/18B
     - taxable_401k_distributions # Line 18A/18B
     - taxable_403b_distributions # Line 18A/18B

diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/joint.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/gross_income/sources/joint.yaml
@@ -15,7 +15,7 @@ values:
     - ar_taxable_capital_gains_joint # Line 14
     - taxable_ira_distributions # Line 16, or Lines 17A/17B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 17A/17B after age 59 1/2
-    - military_retirement_pay # Line 17A/17B
+    - military_retirement_income # Line 17A/17B
     - taxable_pension_income # Line 17A/17B
     - taxable_disability_benefits # Line 17A/17B
     - rental_income # Line 18
@@ -41,7 +41,7 @@ values:
     - ar_taxable_capital_gains_joint # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17 (Lines 17A/17B on the 2018 form)
+    - military_retirement_income # Line 17 (Lines 17A/17B on the 2018 form)
     - taxable_pension_income # Line 18A/18B
     - taxable_disability_benefits # Line 18A/18B
     - rental_income # Line 19
@@ -61,7 +61,7 @@ values:
     - ar_taxable_capital_gains_joint # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17
+    - military_retirement_income # Line 17
     - taxable_pension_income # Line 18A/18B
     - taxable_disability_benefits # Line 18A/18B
     - rental_income # Line 19
@@ -80,7 +80,8 @@ values:
     - ar_taxable_capital_gains_joint # Line 14
     - taxable_ira_distributions # Line 16, or Lines 18A/18B after age 59 1/2
     - taxable_roth_conversions # Line 16, or Lines 18A/18B after age 59 1/2
-    - military_retirement_pay # Line 17
+    - military_retirement_income # Line 17
+
     - taxable_pension_income # Line 18A/18B
     - taxable_401k_distributions # Line 18A/18B
     - taxable_403b_distributions # Line 18A/18B

diff --git a/policyengine_us/parameters/gov/states/ca/tax/income/agi/military_retirement/agi_limit.yaml b/policyengine_us/parameters/gov/states/ca/tax/income/agi/military_retirement/agi_limit.yaml
@@ -0,0 +1,38 @@
+description: California limits the military retirement and survivor benefit exclusion to filers with federal adjusted gross income at or below this amount, by filing status.
+metadata:
+  unit: currency-USD
+  period: year
+  label: California military retirement and survivor benefit exclusion federal AGI limit
+  breakdown:
+    - filing_status
+  reference:
+    - title: Cal. Rev. & Tax. Code § 17132.9
+      href: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17132.9.&lawCode=RTC
+    - title: Cal. Rev. & Tax. Code § 17132.10
+      href: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17132.10.&lawCode=RTC
+
+SINGLE:
+  values:
+    2021-01-01: 0
+    2025-01-01: 125_000
+    2030-01-01: 0
+JOINT:
+  values:
+    2021-01-01: 0
+    2025-01-01: 250_000
+    2030-01-01: 0
+SEPARATE:
+  values:
+    2021-01-01: 0
+    2025-01-01: 125_000
+    2030-01-01: 0
+HEAD_OF_HOUSEHOLD:
+  values:
+    2021-01-01: 0
+    2025-01-01: 125_000
+    2030-01-01: 0
+SURVIVING_SPOUSE:
+  values:
+    2021-01-01: 0
+    2025-01-01: 250_000
+    2030-01-01: 0
diff --git a/policyengine_us/parameters/gov/states/ca/tax/income/agi/military_retirement/cap.yaml b/policyengine_us/parameters/gov/states/ca/tax/income/agi/military_retirement/cap.yaml
@@ -0,0 +1,14 @@
+description: California caps the military retirement and survivor benefit exclusion at this amount per benefit category per return.
+values:
+  2021-01-01: 0
+  2025-01-01: 20_000
+  2030-01-01: 0
+metadata:
+  unit: currency-USD
+  period: year
+  label: California military retirement and survivor benefit exclusion cap
+  reference:
+    - title: Cal. Rev. & Tax. Code § 17132.9
+      href: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17132.9.&lawCode=RTC
+    - title: Cal. Rev. & Tax. Code § 17132.10
+      href: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=17132.10.&lawCode=RTC
diff --git a/policyengine_us/parameters/gov/states/ca/tax/income/agi/subtractions.yaml b/policyengine_us/parameters/gov/states/ca/tax/income/agi/subtractions.yaml
@@ -6,6 +6,13 @@ values:
     - us_govt_interest
     - salt_refund_income
     - ca_other_subtractions
+  2025-01-01:
+    - taxable_social_security
+    - taxable_unemployment_compensation
+    - us_govt_interest
+    - salt_refund_income
+    - ca_military_retirement_exclusion
+    - ca_other_subtractions
 
 metadata:
   reference:

diff --git a/policyengine_us/parameters/gov/states/co/tax/income/subtractions/pension/income_sources.yaml b/policyengine_us/parameters/gov/states/co/tax/income/subtractions/pension/income_sources.yaml
@@ -10,6 +10,7 @@ values:
     - keogh_distributions
     - taxable_roth_conversions
     - taxable_disability_benefits
+    - military_retirement_income
   # In 2022 the taxable social security is calculated separately.
   2022-01-01:
     - taxable_pension_income
@@ -20,6 +21,7 @@ values:
     - keogh_distributions
     - taxable_roth_conversions
     - taxable_disability_benefits
+    - military_retirement_income
 metadata:
   period: year
   unit: list

diff --git a/policyengine_us/parameters/gov/states/ct/tax/income/subtractions/subtractions.yaml b/policyengine_us/parameters/gov/states/ct/tax/income/subtractions/subtractions.yaml
@@ -3,7 +3,8 @@ values:
   2021-01-01:
     - us_govt_interest #ln 39
     - ct_social_security_benefit_adjustment #ln 41
-    - military_retirement_pay #ln 44
+    - military_retirement_income #ln 44
+
     - ct_pension_annuity_subtraction #ln 48b
     - salt_refund_income #ln 38
 

diff --git a/policyengine_us/parameters/gov/states/dc/tax/income/subtractions/sources.yaml b/policyengine_us/parameters/gov/states/dc/tax/income/subtractions/sources.yaml
@@ -21,3 +21,4 @@ values:
     - dc_disability_exclusion
     - us_govt_interest_person
     - salt_refund_income
+    - dc_survivor_benefits_subtraction
diff --git a/...engine_us/parameters/gov/states/dc/tax/income/subtractions/survivor_benefits/min_age.yaml b/...engine_us/parameters/gov/states/dc/tax/income/subtractions/survivor_benefits/min_age.yaml
@@ -0,0 +1,10 @@
+description: District of Columbia limits the government survivor benefit exclusion to individuals who have reached at least this age by the end of the tax year.
+values:
+  2015-01-01: 62
+metadata:
+  label: DC minimum age for survivor benefits exclusion
+  unit: year
+  period: year
+  reference:
+    - title: D.C. Code § 47-1803.02(a)(2)(N)(ii)
+      href: https://code.dccouncil.gov/us/dc/council/code/sections/47-1803.02
diff --git a/...s/parameters/gov/states/de/tax/income/subtractions/exclusions/pension/income_sources.yaml b/...s/parameters/gov/states/de/tax/income/subtractions/exclusions/pension/income_sources.yaml
@@ -6,6 +6,7 @@ values:
     - taxable_interest_income
     - rental_income
     - taxable_pension_income
+    - military_retirement_income
     - taxable_ira_distributions
     - taxable_401k_distributions
     - taxable_403b_distributions

diff --git a/...meters/gov/states/ga/tax/income/agi/exclusions/military_retirement/additional/amount.yaml b/...meters/gov/states/ga/tax/income/agi/exclusions/military_retirement/additional/amount.yaml
@@ -14,4 +14,5 @@ metadata:
   - title: 2025 IT-511 Individual Income Tax Booklet - Subtractions(2)
     href: https://dor.georgia.gov/document/document/2025-it-511-individual-income-tax-booklet/download#page=21
 values:
+  2021-01-01: 0
   2022-01-01: 17_500
diff --git a/...ngine_us/parameters/gov/states/ga/tax/income/agi/exclusions/military_retirement/base.yaml b/...ngine_us/parameters/gov/states/ga/tax/income/agi/exclusions/military_retirement/base.yaml
@@ -14,4 +14,5 @@ metadata:
   - title: 2025 IT-511 Individual Income Tax Booklet - Subtractions(2)
     href: https://dor.georgia.gov/document/document/2025-it-511-individual-income-tax-booklet/download#page=21
 values:
+  2021-01-01: 0
   2022-01-01: 17_500
diff --git a/policyengine_us/parameters/gov/states/ga/tax/income/agi/exclusions/retirement/sources.yaml b/policyengine_us/parameters/gov/states/ga/tax/income/agi/exclusions/retirement/sources.yaml
@@ -28,3 +28,4 @@ values:
   - taxable_sep_distributions
   - keogh_distributions
   - taxable_roth_conversions
+  - military_retirement_pay_survivors
diff --git a/policyengine_us/parameters/gov/states/hi/tax/income/subtractions/subtractions.yaml b/policyengine_us/parameters/gov/states/hi/tax/income/subtractions/subtractions.yaml
@@ -2,12 +2,14 @@ description: Hawaii subtracts these sources from adjusted gross income.
 values:
   2021-01-01:
     - taxable_pension_income # Line 13
+    - military_retirement_income # Line 13
     - taxable_social_security # Line 14
     - hi_military_pay_exclusion # Line 15
     - us_govt_interest # Line 18
     - student_loan_interest_ald # Line 18
   2025-01-01:
     - taxable_pension_income # Line 13
+    - military_retirement_income # Line 13
     - taxable_social_security # Line 14
     - hi_military_pay_exclusion # Line 15
     - us_govt_interest # Line 18

diff --git a/policyengine_us/parameters/gov/states/ia/tax/income/taxable_income/subtractions.yaml b/policyengine_us/parameters/gov/states/ia/tax/income/taxable_income/subtractions.yaml
@@ -1,28 +1,11 @@
 description: Iowa subtracts these sources from taxable income on and after 2023.
 values:
   2021-01-01:
-    # Line 1B
-    - us_govt_interest
-    # Dividends from federal securities
-    # Line 5B 
-    - taxable_social_security
-    # Line 6B
-    - military_service_income
-    # Line 7B
-    - ia_pension_exclusion
-    # Railroad unemployment income
-    # Bonus Depreciation
-    # Iowa Health Insurance Deduction
-    # Iowa capital gains deduction
-    - ia_529_plan_subtraction
-    # Schedule 1 line 19b, code h (IA 2440)
-    - ia_disability_income_exclusion
-  2024-01-01: # military_retirement_pay added in 2024.
     # Line 1B
     - us_govt_interest
     # Dividends from federal securities
     # Line 4B
-    - military_retirement_pay 
+    - military_retirement_income
     # Line 5B 
     - taxable_social_security
     # Line 6B

diff --git a/...us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/income_sources.yaml b/...us/parameters/gov/states/id/tax/income/deductions/retirement_benefits/income_sources.yaml
@@ -2,7 +2,8 @@ description: Idaho counts the following income sources under the retirement bene
 values:
   2021-01-01:
     - public_pension_income
-    - military_retirement_pay
+    - military_retirement_income
+
   2025-01-01:
     - public_pension_income
 metadata:

diff --git a/policyengine_us/parameters/gov/states/il/tax/income/base/subtractions.yaml b/policyengine_us/parameters/gov/states/il/tax/income/base/subtractions.yaml
@@ -6,6 +6,7 @@ values:
     - taxable_pension_income
     - taxable_retirement_distributions
     - taxable_roth_conversions
+    - military_retirement_income
     - il_schedule_m_subtractions
     - il_529_plan_subtraction
     - salt_refund_income

diff --git a/policyengine_us/parameters/gov/states/in/tax/income/deductions/deductions.yaml b/policyengine_us/parameters/gov/states/in/tax/income/deductions/deductions.yaml
@@ -13,6 +13,7 @@ values:
     - in_other_deductions
     - in_disability_retirement_deduction # IC 6-3-2-9 (code 602)
     - in_civil_service_annuity_deduction
+    - in_military_retirement_deduction
 
   2023-01-01:
     # IC 6-3-2-6
@@ -41,6 +42,8 @@ values:
     - military_basic_pay
     # IC 6-3-2-3.7
     - in_civil_service_annuity_deduction
+    # IC 6-3-2-4(a)
+    - in_military_retirement_deduction
 
   2024-01-01:
     # IC 6-3-2-6
@@ -71,6 +74,8 @@ values:
     - in_healthcare_sharing_deduction
     # IC 6-3-2-3.7
     - in_civil_service_annuity_deduction
+    # IC 6-3-2-4(a)
+    - in_military_retirement_deduction
 
   2026-01-01:
     # IC 6-3-2-6
@@ -107,6 +112,8 @@ values:
     - in_auto_loan_interest_deduction
     # IC 6-3-2-3.7
     - in_civil_service_annuity_deduction
+    # IC 6-3-2-4(a)
+    - in_military_retirement_deduction
 
   2027-01-01:
     # IC 6-3-2-6
@@ -137,6 +144,8 @@ values:
     - in_healthcare_sharing_deduction
     # IC 6-3-2-3.7
     - in_civil_service_annuity_deduction
+    # IC 6-3-2-4(a)
+    - in_military_retirement_deduction
 
 metadata:
   unit: list

diff --git a/policyengine_us/parameters/gov/states/in/tax/income/deductions/military_retirement/base.yaml b/policyengine_us/parameters/gov/states/in/tax/income/deductions/military_retirement/base.yaml
@@ -0,0 +1,10 @@
+description: Indiana deducts up to this base amount of military retirement pay or survivor benefits.
+values:
+  2021-01-01: 6_250
+metadata:
+  label: Indiana military retirement deduction base amount
+  unit: currency-USD
+  period: year
+  reference:
+    - title: IC 6-3-2-4
+      href: http://iga.in.gov/legislative/laws/2021/ic/titles/006#6-3-2-4
diff --git a/...ne_us/parameters/gov/states/in/tax/income/deductions/military_retirement/excess_rate.yaml b/...ne_us/parameters/gov/states/in/tax/income/deductions/military_retirement/excess_rate.yaml
@@ -0,0 +1,11 @@
+description: Indiana applies this deduction rate to military retirement benefits exceeding the base amount.
+values:
+  2021-01-01: 0.75
+  2022-01-01: 1
+metadata:
+  label: Indiana military retirement deduction excess rate
+  unit: /1
+  period: year
+  reference:
+    - title: IC 6-3-2-4
+      href: http://iga.in.gov/legislative/laws/2021/ic/titles/006#6-3-2-4
diff --git a/policyengine_us/parameters/gov/states/la/tax/income/exempt_income/sources.yaml b/policyengine_us/parameters/gov/states/la/tax/income/exempt_income/sources.yaml
@@ -4,7 +4,8 @@ values:
     - us_govt_interest # 01E
     # Louisiana State Employees’ Retirement Benefits 02E
     # Louisiana State Teachers’ Retirement Benefits 03E
-    - military_retirement_pay # 04E
+    - military_retirement_income # 04E
+
     # Other Retirement Benefits 05E (federal civil service, municipal, etc.)
     # Proxy note: Schedule E exempts specific Louisiana state/municipal systems and federal
     # retirement systems (codes 02E, 03E, 05E). Out-of-state public pensions are not exempt.

diff --git a/...gov/states/ma/tax/income/credits/senior_circuit_breaker/income/disallowed_deductions.yaml b/...gov/states/ma/tax/income/credits/senior_circuit_breaker/income/disallowed_deductions.yaml
@@ -29,6 +29,7 @@ values:
     - ssi
     - ma_state_supplement
     - tanf
+    - military_retirement_income
     # In-kind under § 6(k)(1) item 2; see the note above before re-enabling.
     # - snap
     # - wic