Nebraska advances bill to speed up Social Security tax cut

LINCOLN, Neb. (AP) — A proposal to speed up the implementation of a tax cut for Social Security recipients cleared a key hurdle Tuesday in the Nebraska Legislature.

Lawmakers voted, 42-0, to advance the bill through the first of three required votes. The measure would phase out Nebraska’s tax on Social Security income by 2025. Lawmakers approved the exemption last year, but adopted a slower phase-in that would eliminate it by 2030.

The faster phase-out was proposed after the state collected far more tax revenue than expected, leaving Nebraska with a general fund surplus of $412 million. Some lawmakers have questioned whether it’s prudent to rely on state revenues that have surged recently, arguing that tax collections were bolstered by federal pandemic stimulus payments into the economy.

Sen. Brett Lindstrom, of Omaha, said the bill would benefit an estimated 325,000 Nebraska retirees. Lindstrom has said Nebraska is one of 13 states that taxes Social Security income, and many of Nebraska’s neighboring states do not.

The measure would cost the state an estimated $40.8 million in lost revenue in its first year and $73.8 million by fiscal year 2027.