Gov. Dave Heineman has signed into law tax cuts which could total more than $400 million and the chairman of the legislature’s Revenue Committee says the tax breaks will mean more in the years to come.
LB 987 will index the state individual income tax system to inflation, preventing bracket creep as costs rise.
“This is very, very important tax relief and let me just say for Nebraskans in particular the fact that we are now indexing individual income tax brackets is very, very important,” Heineman said during a bill signing ceremony in his Capitol office.
The bill also exempts up to $58,000 in Social Security income for couples. It gives military retirees an option to reduce the state income tax on their pensions.
Revenue Committee chairman, Sen. Galen Hadley of Kearney, says that while indexing the state income tax to inflation might seem minor, its impact could be major over the years.
“I think it is one of those tax cuts that starts small and eventually becomes a very significant amount,” Hadley tells Nebraska Radio Network.
Hadley notes the move is estimated to save Nebraska taxpayers as much as $100 million over the next 10 years. Hadley says that while many have complained that the legislature didn’t rally around a big tax cut package, they will be surprised by that impact of the cuts that did pass.
Other tax measures signed into law:
LB 96 exempts replacement parts for farm machinery from the state sales tax.
LB 905 increases the $115 million Property Tax Credit Program by $25 million a year.
LB 986 expands the homestead exemption program.
LB 1087 gives the homestead exemption to honorably discharged veterans.
AUDIO: Brent Martin reports [:50]