DTrim99 · Nov 9, 2026 · Nov 10, 2026
diff --git a/changelog.d/veteran-retired-pay-fixes.fixed.md b/changelog.d/veteran-retired-pay-fixes.fixed.md
@@ -0,0 +1 @@
+Count military retired pay and survivor annuities in New Mexico's modified gross income and Oklahoma's credit gross income.
diff --git a/policyengine_us/parameters/gov/states/nm/tax/income/modified_gross_income.yaml b/policyengine_us/parameters/gov/states/nm/tax/income/modified_gross_income.yaml
@@ -11,6 +11,9 @@ values:
     - child_support_received
     - rental_income
     - pension_income
+    # NMSA 1978 § 7-2-2(L)(9), (11): annuities and pensions, including military
+    # retired pay and survivor annuities, which pension_income leaves out.
+    - military_retirement_income
     - retirement_distributions
     - total_unemployment_compensation
     - irs_employment_income
@@ -27,5 +30,5 @@ metadata:
   reference:
     - title: New Mexico Income Tax Act, Chapter 7 - Taxation, 7-2-2. Definitions, L
       href: https://nmonesource.com/nmos/nmsa/en/item/4340/index.do#!fragment/zoupio-_Toc140503656/BQCwhgziBcwMYgK4DsDWszIQewE4BUBTADwBdoAvbRABwEtsBaAfX2zgEYAWABgFYeAZgBsfYQEoANMmylCEAIqJCuAJ7QA5BskRCYXAiUr1WnXoMgAynlIAhdQCUAogBknANQCCAOQDCTyVIwACNoUnZxcSA
-    - title: 2025 PIT-RC instructions, line 11 (income from an estate or trust)
-      href: https://taxsim.nber.org/historical_state_tax_forms/NM/2025/NM_PIT_RC_INST.PDF#page=4
+    - title: "2025 PIT-RC instructions, modified gross income (an annuity, pension, retirement pay; line 5 pensions and annuities; line 11 estate or trust) #page 2,4"
+      href: https://taxsim.nber.org/historical_state_tax_forms/NM/2025/NM_PIT_RC_INST.PDF#page=2
diff --git a/policyengine_us/parameters/gov/states/ok/tax/income/credits/gross_income_sources.yaml b/policyengine_us/parameters/gov/states/ok/tax/income/credits/gross_income_sources.yaml
@@ -16,6 +16,10 @@ values:
     - estate_income
     - dividend_income
     - pension_income
+    # OAC 710:50-15-96(c) and Form 538-S line 6: pensions and annuities, taxable
+    # or not, including military retired pay and survivor annuities, which
+    # pension_income leaves out.
+    - military_retirement_income
     - debt_relief
     - total_unemployment_compensation
     - workers_compensation
@@ -40,8 +44,8 @@ metadata:
       href: https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/individuals/past-year/2023/511-Pkt.pdf
     - title: 2024 Form 511 instructions
       href: https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/individuals/past-year/2024/511-Pkt-2024.pdf
-    - title: 2025 Form 511 packet, Form 538-S, Part 3 (gross income lines 9 to 14)
-      href: https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/individuals/current/511-Pkt.pdf#page=51
+    - title: "2025 Form 511 packet, Form 538-S, Part 3 (taxable and nontaxable gross income, lines 1 to 14; line 6 other pensions and annuities) #page 50-51"
+      href: https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/individuals/current/511-Pkt.pdf#page=50
     - title: 2025 Form 538-H, lines 10 (public assistance) and 11 (gross positive income from rentals, royalties, partnerships, estates and trusts)
       href: https://oklahoma.gov/content/dam/ok/en/tax/documents/forms/individuals/current/538-H.pdf#page=1
     - title: Okla. Admin. Code 710:50-15-96(c) (gross household income is the gross income of every type)

diff --git a/policyengine_us/tests/policy/baseline/gov/states/nm/tax/income/nm_modified_gross_income.yaml b/policyengine_us/tests/policy/baseline/gov/states/nm/tax/income/nm_modified_gross_income.yaml
@@ -110,3 +110,16 @@
   output:
     # § 7-2-2(L): "undiminished by losses". max(-5,000, 0) = 0, so 20,000.
     nm_modified_gross_income: 20_000
+
+- name: NM modified gross income includes military retired pay and survivor annuities
+  period: 2025
+  input:
+    state_code: NM
+    irs_employment_income: 20_000
+    military_retirement_pay: 30_000
+    military_retirement_pay_survivors: 6_000
+  output:
+    # § 7-2-2(L)(9), (11): annuities and pensions, so military retired pay and
+    # a survivor annuity count:
+    # 20,000 + 30,000 + 6,000.
+    nm_modified_gross_income: 56_000
diff --git a/...m/tax/income/rebates/low_income_comprehensive/nm_low_income_comprehensive_tax_rebate.yaml b/...m/tax/income/rebates/low_income_comprehensive/nm_low_income_comprehensive_tax_rebate.yaml
@@ -355,3 +355,35 @@
         state_code: NM
   output:
     nm_low_income_comprehensive_tax_rebate: 212
+
+- name: Military retired pay puts a couple, both 67, over the rebate's income limit.
+  period: 2025
+  input:
+    people:
+      head:
+        age: 67
+        is_tax_unit_head: true
+        military_retirement_pay: 45_000
+        social_security_retirement: 15_000
+      spouse:
+        age: 67
+        is_tax_unit_spouse: true
+        social_security_retirement: 15_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse]
+        state_code: NM
+  output:
+    # NMSA 1978 § 7-2-2(L)(9), (11): modified gross income counts military
+    # retired pay. 45,000 + 30,000 Social Security = 75,000.
+    nm_modified_gross_income: 75_000
+    # Two federal exemptions plus two for each spouse 65 or older.
+    nm_low_income_comprehensive_tax_rebate_exemptions: 6
+    # 75,000 is above the six-exemption table's $36,000 limit. Without the
+    # military retired pay, modified gross income would be 30,000 and the
+    # rebate 149.
+    nm_low_income_comprehensive_tax_rebate: 0
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ok/tax/income/ok_gross_income.yaml b/policyengine_us/tests/policy/baseline/gov/states/ok/tax/income/ok_gross_income.yaml
@@ -70,3 +70,15 @@
     ok_ssp: 480
     ok_gross_income: 12_408
     ok_ptc: 0
+
+- name: OK gross income counts military retired pay and survivor annuities
+  period: 2025
+  input:
+    irs_employment_income: 10_000
+    military_retirement_pay: 15_000
+    military_retirement_pay_survivors: 2_000
+    state_code: OK
+  output:
+    # Form 538-S Part 3 counts taxable and nontaxable income, line 6 other
+    # pensions and annuities: 10,000 + 15,000 + 2,000.
+    ok_gross_income: 27_000
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ok/tax/income/ok_stc.yaml b/policyengine_us/tests/policy/baseline/gov/states/ok/tax/income/ok_stc.yaml
@@ -219,3 +219,33 @@
     # elderly $50,000 limit and restoring the $40-per-person credit.
     ok_gross_income: 38_565.84
     ok_stc: 80
+
+- name: OK STC - 2025 - military retired pay puts a couple, both 67, over the limit
+  period: 2025
+  input:
+    people:
+      head:
+        age: 67
+        is_tax_unit_head: true
+        military_retirement_pay: 45_000
+        social_security_retirement: 15_000
+      spouse:
+        age: 67
+        is_tax_unit_spouse: true
+        social_security_retirement: 15_000
+    tax_units:
+      tax_unit:
+        members: [head, spouse]
+        filing_status: JOINT
+    households:
+      household:
+        members: [head, spouse]
+        state_code: OK
+  output:
+    # OAC 710:50-15-96(c) and Form 538-S line 6 count military retired pay,
+    # taxable or not. 45,000 + 30,000 Social Security = 75,000.
+    ok_gross_income: 75_000
+    # 75,000 is above the $50,000 limit for filers 65 or older. Without the
+    # military retired pay, gross income would be 30,000 and the credit
+    # 2 x 40 = 80.
+    ok_stc: 0
Original file line number	Diff line number	Diff line change
		@@ -0,0 +1 @@
		Count military retired pay and survivor annuities in New Mexico's modified gross income and Oklahoma's credit gross income.