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With only a few days remaining in the legislative session there are a variety of topics that have yet to be debated. One piece of legislation that we have yet to take up was advanced to General File out of the Revenue committee just this week – LB 153.
LB 153 was introduced by Senator Brewer and prioritized by Senator Lowe. If passed, the legislation repeals the current, one-time election for retired military to exempt a portion of their military retirement benefit income from tax. It would replace it with a 50% exemption for military retirement benefit income, to the extent it was included in the federal adjusted gross income. The change would begin on or after January 2020.
It’s estimated that around 16,000 Nebraska citizens currently receive some type of military retired pay. Offutt in Bellevue employs over 3,000 individuals at any given time. With every state surrounding Nebraska either exempting military retirement pay or taxing it at a very reduced rate, we are inevitably losing citizens to our neighboring states where they can avoid paying state income tax.
At its core, I see this as a workforce development bill. Retired military personnel are highly trained, highly educated, and have demonstrated leadership and management skills. Statistics show that military retirees are 50 percent more likely to start a small business. These are exactly the types of people we want to attract, and because of our tax policy, we are losing them to our neighbors.
About 400 people a year retire from Offutt Air Force base. A lot of them retire and turn around and walk back into the same work environment, either becoming a civilian employee or returning as a military contractor. When they do that in Offutt Air Force base, evidence has shown that many of them establish their residence across the border in Iowa where their military benefits are not taxed. This is an important issue that we need to address in the near future and one I support. I thank Senator Brewer and Senator Lowe for their work on this important topic.
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