Americans To Get More Money Under Social Security Law
Social Security benefits will become tax-exempt in two states in 2024. Legislation in Nebraska and Missouri will go into effect next year, bringing to 41 the number of states that don’t tax Social Security.
This leaves nine states that tax Social Security benefits. Those states include Colorado, Connecticut, Kansas, Minnesota, Montana, New Mexico, Rhode Island, Utah, Vermont and West Virginia.
The AARP told Newsweek the laws in Missouri and Nebraska are just the beginning.
“AARP has been working across the country to exempt Social Security from state taxes–Missouri and Nebraska are our latest wins, but there are still nine states left who do this [tax Social Security],” said Bill Sweeney, AARP’s vice president of government affairs in an exclusive statement to Newsweek. “We’re going to keep fighting to ensure seniors can keep more of their hard-earned money. And make no mistake, Social Security is your money, which you earned.”
The new laws in Missouri and Nebraska go into effect January 1, 2024.
The Missouri provision removes the income limits used for calculating how much of a taxpayer’s Social Security or public pension benefits will be subject to tax, according to Missouri Senate Bill 190. Even though Social Security will be completely exempt, public pensions may be subject to other taxes, the bill notes.
Social Security will now be tax-exempt in Nebraska and Missouri. Only nine states will tax Social Security benefits in 2024.
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“Removing the income limits from the Social Security benefits will result in 100 percent of Social Security benefits no longer being taxable in Missouri,” said the bill, which was proposed by Missouri Senator Tony Luetkemeyer and Representative Ben Baker.
Previously, Missouri’s tax rate ranged from zero to 4.95 percent, with benefits being exempt for single filers with a federally adjusted gross income below $85,000 and joint filers with a federally adjusted gross income of $100,000.
Nebraska will also make Social Security exempt from income tax.
Nebraska’s unicameral legislature has been revising its stance on taxing Social Security for a few years now. A bill introduced in 2022 aimed to make the benefits tax-exempt by 2025, but Legislative Bill 754 accelerated that process, making the benefits tax-exempt as of January 1, 2024. Governor Jim Pillen signed the bill into law in May of this year.
Before Nebraska’s state law, Social Security was taxed at rates ranging from 2.46 percent to 6.64 percent with exemptions for single filers with a federal adjusted gross income of up to $45,790 and joint filers with a federal adjusted gross income of up to $61,760.
Newsweek reached out to Luetkemeyer, Baker and Pillen for a comment via email.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
