Ricketts Introduces Two Bills to Cut Taxes on Social Security, Military Retirement Benefits
WASHINGTON, D.C. – Today, U.S. Senator Pete Ricketts (R-NE) introduced two bills to cut federal taxes on Social Security and military retirement benefits. The Social Security Check Tax Cut Act would begin phasing out federal taxes on Social Security benefits. The bipartisan Tax Cuts for Veterans Act, introduced with Senator Jacky Rosen (D-NV), would eliminate the federal tax on military retirement benefits. The bills are modeled after successful efforts to eliminate state taxes on similar benefits when Ricketts was Governor of Nebraska.
“Social Security and veterans’ benefits should be completely tax-free,” said Senator Ricketts. “We need to provide relief at the federal level, just like we did in Nebraska. My bills will boost retirement income and ensure seniors and veterans keep more of their hard-earned money – just as President Trump promised.”
“Veterans in Nevada and across our nation have made huge sacrifices to keep our nation safe, and the least we can do is ensure they can retain all of their retirement pay,” said Senator Rosen of the Tax Cuts for Veterans Act. “We’re introducing this bipartisan bill to make military retirement pay tax-free, giving the heroic men and women who served in our military greater financial relief and stability.”
The bills were first covered by Punchbowl News here. Senator Ricketts will discuss the bills in his weekly press conference call with Nebraska media tomorrow.
BACKGROUND ON SOCIAL SECURITY CHECK TAX CUT ACT:
From its creation in 1935, Social Security has been the backbone of most Americans’ retirement plans. According to the Social Security Administration, nearly nine out of ten people aged 65 and older received a Social Security benefit as of June 30 of this year. From 1935 until 1983, Social Security benefits were untaxed, recognizing that workers already paid into Social Security via the payroll tax each pay period. In 1983, 50% of Social Security benefits became taxable. In 1993, President Bill Clinton signed a bill into law making 85% of benefits taxable.
As Governor in 2022, Ricketts signed LB873 into law to phase in the elimination of state taxes on Social Security benefits over a period of years. The Social Security Check Tax Cut Act would similarly phase out federal taxes on Social Security benefits, beginning with a 10% cut in year one and increasing to 20% in year two. Congress can continue phasing out the tax by 10% a year and make all Social Security income tax free by 2035. Bill text can be found here.
BACKGROUND ON TAX CUTS FOR VETERANS ACT
Around 117,000 veterans live in Nebraska. As Governor in 2021, Ricketts signed LB387 into law to eliminate state taxes on military retirement benefits. The bipartisan bill passed 47-0.
The Tax Cuts for Veterans Act would provide real financial relief for veterans and their families. The savings per veteran would vary depending on their earned retirement pay. An enlisted soldier, sailor, airman, marine, guardsman, or guardian who served for 20 years could save over $500 per month and over $6,000 per year. Bill text can be found here.