“The Good Life” Improves for Nebraska’s Retirees and Disabled Persons
“The Good Life” is becoming more attractive to Nebraska retirees. The Nebraska legislature has recently approved limiting Social Security and military retirement taxation for Nebraska purposes for tax years beginning January 1, 2015. Iowa has had similar tax breaks for several years, and now Nebraska is becoming more competitive.
Retirees receiving social security benefits and having lower federal adjusted gross incomes may now subtract their federally taxable social security benefits to arrive at Nebraska taxable income beginning January 1, 2015. The highest federal adjusted gross income that will qualify is $58,000 for married persons and is $43,000 for all other taxpayers.
Military personnel retiring after December 31, 2014 now have the opportunity to exclude a portion of their military retirement benefits from their Nebraska taxable income. The one-time election is not based on the overall income of the taxpayer and must be made within the two years following military service retirement. The election offers two income exclusion choices:
- Taxpayers may elect to exclude 40% of their military retirement benefits for seven consecutive years beginning in the election year or
- Taxpayers may elect to exclude 15% of their benefits for all taxable years beginning in the year of their sixty-seventh birthday.
Please consult your tax advisor to decide what choice would work best for your personal situation.