Nebraska Legislature Passes Social Security Income Tax Phase Out

LINCOLN – The Nebraska Legislature passed a bill that will phase out state income taxes on Social Security benefits over the next ten years. The bill, which was strongly backed by AARP Nebraska, would first reduce state taxation of benefits by 50 percent over five years. The Legislature will then need to revisit the tax break to ensure that the state has the revenue to eliminate all state tax on Social Security income by 2030.

Todd Stubbendieck, the Director of AARP Nebraska, said that Nebraska is one of only 13 states that taxes Social Security income. 

We have been fighting this for many many years and we’re glad that we are finally seeing progress on this bill that will eliminate these taxes on social security benefits. We think this is important for our seniors in the state. This is really important for middle class tax relief. Helping putting money back in their pockets on a monthly basis. 

The bill will also provide additional income security that older Nebraskans need, to live in their own homes and communities as they age, near family and friends. Nebraskans age 50 and older account for 56 cents of every dollar in state consumer spending – generating an annual economic impact of $50 billion. They also contribute over $2 billion each year in unpaid family caregiving.

In 2014, the Nebraska Legislature started on a path toward exempting Social Security benefits from state income taxation. Beneficiaries with incomes below $58,000, for a married couple, and $43,000, for those that are single, are currently exempt from paying state tax on their benefits. That exemption will continue.

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