Associated Press
January 15, 2009

The taxation of Social Security benefits would be phased out over the next four years, under a plan presented by a Nebraska lawmaker.

State Sen. Jeremy Nordquist of Omaha introduced a bill (LB303) to the Legislature on Thursday that would allow seniors to exempt $15,000 of their Social Security income when filing tax returns for this year. The amount of the exemption would be double for couples filing jointly.

The exemption would increase to $75,000 in 2013, effectively ending state taxes on the benefits. Once fully implemented, the measure would decrease state tax revenues by about $54 million annually.

Iowa and Missouri are among 26 states that don’t tax Social Security benefits.

Nordquist says seniors are especially vulnerable in the current economic climate.