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State of California Franchise Tax Board

Tax Change for Military Personnel Anticipated

Taxpayers Encouraged to Check FTB's Website for Status of Legislation

State Controller Steve Westly and State Senator Gilbert Cedillo today announced new legislation that will reduce taxes for military personnel who are stationed in California but are not residents of the state.

SB 615, authored by Senator Cedillo, was recently amended to conform to the tax changes in federal H.R. 100, the Servicemembers' Civil Relief Act. The act prohibits the Franchise Tax Board from using the “California method,” which included military income in computing state taxes for a non-resident service member's total income.

A non-resident military taxpayer who earns California-source non-military income, from a part-time job for example, will most likely pay a lower state tax under this new law. It will also reduce the complexity of computing state income taxes by eliminating the total income-from-all-sources calculation.

"Our men and women in uniform put their lives on the line for us every day," said State Controller and Franchise Tax Board (FTB) Chair Steve Westly. "This legislation means lower taxes and less complexity for military personnel who live out-of-state but are stationed in California."

State Senator Gilbert Cedillo added, "It is imperative to give soldiers the respect they deserve. This measure is one small way we can show our appreciation."

Because the State's Constitution prohibits California from automatically adopting federal laws, the California Legislature must enact a state law that conforms to the federal changes. The FTB anticipates the passage of this legislation and advises impacted taxpayers to delay filing their returns until close to the April 15 deadline. The FTB will publish instructions advising taxpayers about the new rules once state legislation is passed.

The Federal Act is largely a restatement and modernization of the Soldiers' and Sailors' Civil Relief Act of 1940. The FTB will post more information on its Website at as details become available.

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