AARP is urging members of the Nebraska Legislature’s Revenue Committee to advance a measure that would help protect the purchasing power of lower- and middle income retirees.
LB 738, sponsored by State Sen. Brett Lindstrom of Omaha, would annually adjust Nebraska’s taxation of Social Security benefits for inflation.
Under legislation passed in 2014, Nebraskans filing jointly with income up to $58,000 and single filers with income up to $43,000 are exempted from paying state income tax on their Social Security benefits.
If these income exemption levels are not adjusted for inflation, a growing number of Nebraskans in this group will wind up paying taxes on their benefits, said AARP Nebraska State President Dave Holmquist.
“Without these annual adjustments, retirees are able to keep less and less of their hard-earned money. Rising costs for health care, utilities and other basic necessities like groceries and medications are increasing for older Nebraskans,” Holmquist said in testimony before the committee. “These individuals have limited options for rejoining the workforce, and virtually no time horizon for increased savings.”
Nearly half of Nebraska’s 330,309 Social Security beneficiaries rely on Social Security for 50 percent or more of their income.
“Annually indexing the existing thresholds for inflation would provide some small relief to retirees initially, but much more as time goes on, and would reinforce our state’s commitment to older Nebraskans,” he said.
Holmquist added that LB 738 balances the needs of retirees and the state’s desire to have revenue for important services.