We ended this week by taking up one of the most important bills that we will discuss this session– LB 825– a bipartisan compromise that would have been the biggest structural tax relief bill in Nebraska history. We came up one vote short of breaking a filibuster with 32 votes- but the proposal may come up in other bills before the end of session. This legislation would be pivotal in providing structural Social Security, Income, and Property Tax relief.

Originally, LB 825, introduced by Senator Lindstrom, would have simply exempted Social Security from state taxes. Last year, our Legislature passed a bill with the intent to phase out these burdensome taxes by the year 2030. With the passage of LB 825, the state would have shortened this window, and Social Security taxes would have been a thing of the past starting in 2025. We are currently only one of twelve states that still tax Social Security payments, making Nebraska an unattractive option for retirees.

Although LB 825 was originally intended to only eliminate our state’s Social Security tax, AM 2514 was brought to add other sustainable and much-needed tax cuts. The first of these is reducing the top individual income tax rate from 6.84% to 5.84%. Single Nebraskans only have to make $29,000/year to be considered in the highest tax bracket in our state, and married couples only have to make $58 000. Thus, most of our state falls into this highest bracket and needs relief.

LB 825 as amended by AM 2514 also would have given much-needed extra relief to the property taxpayers across our state. Under this legislation, we would have created a new refundable income tax credit for community college property taxes paid. Our current Property Tax Credit Fund only applies to the property taxes Nebraskans pay to public school districts. By expanding this fund to community college property taxes paid, we would have broadened where these income tax credits go and given more money back to our hardworking families.

Finally, AM 2514 would have incorporated a provision from another bill that sets the minimum level of the LB 1107 refundable income tax credit. In 2023, this amendment would have set the base level of the tax credit fund at $560,700,000 dollars. From there, the fund would have grown annually at the allowable growth percentage (which is based on inflation). 

During the debate on LB 825, we heard story after story of Nebraskans leaving our state because of our tax structure. Unfortunately, seventeen senators (solely from urban areas) decided that giving social security, income, and property tax relief to Nebraskans wasn’t worth the effort and couldn’t even be bothered to vote on the bill. Although extremely disappointing and a slap in the face to all Nebraska taxpayers, we will keep fighting until we get substantial tax relief and reform for our neighbors. The debate over LB 825, and the tax relief contained therein, is far from closed for this session. Stay tuned.

As always, I welcome your input on issues important to you. Follow along on my Facebook and Twitter pages, both entitled “Senator Julie Slama” for more updates, or contact me directly at Senator Julie Slama, District 1 State Capitol, PO Box 94604, Lincoln NE 68509-4604; telephone: 402-471-2733; email: jslama@leg.ne.gov.