LINCOLN- The legislature gave LB64 a commanding 47-0 first round approval to totally phase out state income taxation of Social Security income over a 10-year period, which would reduce state revenue by more than $130 million a year once fully implemented. A large concern of lawmakers is that the loss of revenue could limit prospects for additional property tax reduction.

Other lawmakers suggested a change in which Nebraskans at lower-income levels would be taken care of. Sen. Brewer's bill, LB237 would tie Social Security tax exemptions to the level of a taxpayer's income with a cap on eligibility set at $95,000 for a married couple and $80,000 for a single taxpayer.

"Give relief to those who need it (and not) up to a cost that we can't manage," Brewer said.

Head of the Revenue Committee, Lou Ann Linehan says Nebraska is not competitive with neighboring states when it comes to tax policy which is a factor in Nebraskans moving to southern states upon retirement.

The fiscal impact remains the largest issue with this bill especially considering the impact when the measure would be fully implemented. Retirees with incomes of more than $114,000 a year would receive two-thirds of the tax cut benefits if the bill is fully implemented, according to a study by OpenSky Policy Institute, which opposes the measure.

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