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Bills Target Taxes

A bill introduced in the Nebraska Unicameral Thursday would eliminate state income taxes levied on Social Security benefits for lower and middle-income Nebraskans.

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Reporter: The Associated Press

A bill introduced in the Nebraska Unicameral Thursday would eliminate state income taxes levied on Social Security benefits for lower and middle-income Nebraskans.

“Tax relief is one of my highest priorities, but when money is tight we must focus on the kind of relief that will help Nebraska families and be reinvested back into main streets all across our state," said Sen. Jeremy Nordquist.

He said the tax cut is targeted at those married households with an annual income of $80,000 or less and individuals making $60,000 or less. It amends the exemption amount to keep up with inflation.

In 1984, income thresholds were set under which Social Security benefits would remain exempt from taxation. Those income thresholds were $25,000 for individuals and $32,000 for married couples. Because the income thresholds are not indexed for inflation or wage growth, the share of beneficiaries affected by these thresholds has increased over time, from 26 percent of Social Security beneficiaries affected by income taxation in 1998 to 39 percent in 2005 (Congressional Research Service). Nebraska is one of only five states that currently tax Social Security benefits to the same extent it is taxed by the federal government.

“This is an investment in the retirement security of older Nebraskans,” said Nordquist.

Lawmakers also proposed exemptions from state income taxes on military retirement benefits.

Omaha Sen. Pete Pirsch introduced a measure that would require lawmakers to muster at least 29 votes to pass a state tax increase. The Nebraska constitution currently requires a simple majority in the 49-member Legislature. Pirsch says the additional four votes would require supporters to make a more compelling case for tax increases. But he says the higher threshold would not create an insurmountable obstacle.

The amendment would require voter approval if lawmakers pass it.