F35 Fighter Jet at Offutt Air Force Base during the Nebraska Defenders of Freedom Air Show

(The Center Square) – Nebraska's Gov. Pete Ricketts wants to exempt military retirement benefits from the state income tax in its entirety. Currently, 50% of retirement income is exempt from the state income tax.

Ricketts said exempting the entire amount would help Nebraska attract, and retain, skilled military retirees.

“This is an important workforce development tool for the state of Nebraska,” Ricketts told the Legislature’s Revenue Committee, the Omaha World-Herald reported. “We need to hold on to these folks.”

Deborah Wehrli, executive director of Nebraska AMVETS, agrees with the governor.

“I know one couple in Washington County who left Nebraska and went to South Dakota because military pensions aren’t taxed up there,” Wehrli told The Center Square in an interview. “All the surrounding states around us don’t tax the veterans.”

At Offutt Air Force Base south of Omaha, many veterans leave the state once they retire, Wehrli said.

“They’re leaving because of the tax issue,” she said.

Some states such as Florida and Tennessee don’t have state income taxes and are attracting retirees, Wehrli stated.

“I know quite a few people who have moved to Florida for that reason,” Wehrli said.

With COVID-19, it is difficult for veteran groups to lobby in person at the state capital for the increased exemption but they will have letter-writing campaigns, she said.

“Veterans fought for the country,“ Wehrli said. “They protected us. They were away from their families. It’s time to give back to them. They should be taken care of because they took care of us.”

Exempting military retirements from state taxation could help Nebraska compete for new military installations, such as the U.S. Space Command, advocates say.

The Nebraska legislature passed a 50% tax exemption last year for military retirement income and Legislative Bill 387 by State Sen. Tom Brewer, R-Gordon, would increase that to 100%.