Senators amended and advanced a bill from select file March 19 that would index state income tax brackets for inflation.
The bill also would reduce the amount of Social Security benefits that are included in the federal adjusted gross income (AGI) for state income tax purposes. The adjustment would apply to taxpayers with an AGI of $58,000 or less for married persons filing jointly and $43,000 or less for all other returns.
The estimated reduction in state general fund revenue would be as follows:
• $8.3 million in fiscal year 2014-15;
• $24.9 million in FY2015-16;
• $37.3 million in FY2016-17; and
• $51.6 million in FY2017-18.
Fremont Sen. Charlie Janssen introduced an amendment, adopted 36-0, that incorporated provisions of Janssen’s LB75.
The amended bill would allow an individual to make a one-time election to exclude a portion of his or her military retirement income from state income tax within two years of retirement. The individual could either choose to exempt 40 percent of military retirement income for seven consecutive years or 15 percent for each year, beginning with the year he or she turns 67.
The exemption would apply only to individuals retiring after Jan. 1, 2015. Janssen said he hopes to eventually see an exemption for all retirees but is happy with the modest compromise.
“It’s important for our state and economy to make progress in this area,” he said. “It may not be perfect, but I believe it is a good [solution].”
Senators advanced the bill to final reading on a voice vote.