Tax exemptions proposed for Social Security and military retirement

Members of the Revenue Committee heard testimony Feb. 4 on a bill that would exempt Social Security and military retirement benefits from state income taxes.

LB20, introduced by Omaha Sen. Bob Krist, would reduce an individual’s adjusted gross income by the entire amount of Social Security benefits received by a person beginning Jan. 1, 2015. The bill also would exempt any income received as military retirement benefits.

Krist said 16 other states have similar exemptions in place.

“As a veteran of the United States Air Force, it’s my goal to see Nebraska keep more retired veterans living in the state and attracting more military veterans to the state,” he said. “I will continue to fight for the rights of veterans and those receiving Social Security benefits.”

The proposed exemptions would result in an estimated loss of $151.7 million in fiscal year 2015-16 and $114.2 million in FY2016-17.

Ronald Dupell, representing the Nebraska Veterans Coalition, spoke in favor of the bill, saying it would help to keep veterans in the state after they retire from service.

“Despite good efforts by the state to recognize veterans, it lags behind all neighboring states in benefits to veterans,” he said. “This bill can be part of the state’s effort to retain Offutt Air Force Base and attract more businesses to the state.”

Dick Clark, director of research for the Platte Institute for Economic Research, also supported the bill, saying it would help people with fixed incomes.

“This is an attempt to lower taxes on two demographic groups particularly affected by high taxes,” Clark said. “Few states tax these groups to the extent that Nebraska does.”

No one testified in opposition to the bill and the committee took no immediate action on it.