Income thresholds the state uses to determine whether Social Security benefits are exempt from taxation will be indexed for inflation under a bill passed by the Legislature April 11.
Under current law, federal adjusted gross income for state tax purposes is reduced by the amount received as Social Security benefits if AGI is $58,000 or less for those married filing jointly or $43,000 or less if filing as an individual.
LB738, introduced by Omaha Sen. Brett Lindstrom, indexes those exemption thresholds for inflation in the same way the state’s income tax brackets are indexed, beginning with tax year 2020.
The state Department of Revenue estimates that the bill would decrease state revenue by $1.3 million in fiscal year 2019-20. That would increase to $3.9 million by FY2021-22.
Senators voted 44-2 to pass the bill.