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NE Lawmakers Begin Phasing Out State Taxes on Social Security Benefits



Tuesday, June 1, 2021   

LINCOLN, Neb. -- Nebraska lawmakers are leaning on older residents to help boost the state's economic recovery.

Last week Gov. Pete Ricketts signed Legislative Bill 64 into law, which begins the process of phasing out state taxes on Social Security benefits.

Todd Stubendieck, state director of AARP Nebraska, said the move will help Nebraskans live their retirement years independently and with dignity, and he said every dollar going back into Nebraskans' pockets will be spent locally on necessities.

"And that's going to be a huge economic impact, especially at a time in which we're coming back from COVID," Stubendieck asserted. "And it's important that we're supporting our local economy. So I think this will be a huge economic driver in our state, these tax dollars getting back into our systems."

Stubendieck noted Nebraskans age 50 and older account for 56 cents of every dollar in consumer spending in the state, in part because many have moved past years spent saving for retirement, and generate $50 billion in economic activity.

After some lawmakers voiced concerns about lost revenue, the bill was revised to cut just half of state taxes over the next five years. Lawmakers will need to pass additional legislation to phase out the remaining share by 2030.

Nebraska is one of just 13 states to tax Social Security benefits, and Stubendieck emphasized every dollar counts for families living on fixed incomes as the cost of medicine and other essentials continue to rise.

Stubendieck believes the compromise was the right move, and is pleased older Nebraskans will soon see real tax relief.

"This bill was trying to be fiscally responsible to say, 'We know that we can do the first five years and do the first 50%, but we want to pause at that point, look at the situation, and pass a bill to do the next step,'" Stubendieck explained.

In 2014, the Nebraska Legislature exempted Social Security benefits from state income taxation for married couples with incomes below $58,000 annually, and $43,000 for single people, an exemption which will continue under the new measure.

Disclosure: AARP Nebraska contributes to our fund for reporting on Budget Policy and Priorities, Consumer Issues, Health Issues, and Senior Issues. If you would like to help support news in the public interest, click here.

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