Lawmakers added a pause to the proposed elimination of state taxation of Social Security income before giving the bill second-round approval May 11.
As amended during the first round of debate, LB64, sponsored by Omaha Sen. Brett Lindstrom, would set the exemption on such income, to the extent that it is included in federal adjusted gross income, at 5 percent in tax year 2022. The exemption would increase to 20 percent in 2023 and rise 10 percent per year until reaching 100 percent in tax year 2030.
Gering Sen. John Stinner offered an amendment during select file debate, adopted 37-0, that would pause the process when it reaches 50 percent in tax year 2025.
The amendment states legislative intent to continue incremental reduction of the tax, Stinner said, but would require introduction of a new bill at that time in order to complete the process. Doing so, he said, would ensure that future lawmakers pause and review the state’s revenue capacity before eliminating the tax entirely.
“It’s a safeguard amendment,” Stinner said. “I think it gets done what we want to get done, but still allows us to take a real hard look … in a five-year period of time.”
Following adoption of the amendment, lawmakers advanced LB64 to final reading 44-0.