Nebraska Retirees Ask Lawmakers for Social Security Tax Break

Nebraska

Retirees are telling Nebraska lawmakers that the state’s tax burden is too high, and additional tax cuts may be necessary to keep seniors from fleeing the state during retirement.

One option retirees are pushing: exempting Social Security benefits from the income tax.

A tax package passed last year attempted to shore up some of these issues. From the Grand Island Independent:

Last year’s tax package included a partial [tax] exemption for military retirement pay, but it didn’t apply to those who had already retired before the law went into effect. It also allowed married couples making up to $58,000 a year to have all of their Social Security benefits exempted from Nebraska’s income tax.

But Nebraska retirees said those cuts aren’t enough to keep them from retiring to more tax-friendly states.

Nebraska lawmakers are currently considering three separate bills that would address the tax issue. From the Grand Island Independent:

One measure by [Sen. Paul] Schumacher would provide a tax exemption for earned income of Nebraskans who are at least 65 years old.

Schumacher said the bill would create a financial incentive for retiring baby boomers to stay in the workforce longer rather than retiring, which would help ease the state’s labor shortage. Lifting the tax burden would also help them add to their retirement savings, he said.

Another bill by Sen. Sue Crawford of Bellevue would give tax breaks to military retirees who live in Nebraska while working and earning retirement income. For every dollar those retirees earn from work, one dollar in retirement income would not be taxed. Joint filers could exempt up to $60,000 of their retirement income annually, for up to 15 years.

Sen. Brett Lindstrom of Omaha pitched a bill that would phase out Nebraska’s tax on Social Security income over five years.

The formal names of those bills are: LB63, LB165 and LB26

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