Nebraska National Guard members gain tax relief on military income and medical debt

Legislature Bill 28, introduced in Nebraska on January 15, 2025, is poised to reshape the financial landscape for military personnel and individuals burdened by medical debt. The bill aims to provide significant tax relief by allowing certain income sources related to military service and medical debt discharges to be excluded from federal adjusted gross income.

At the heart of LB28 is a provision that exempts 100% of income from specific military duties, including members of the National Guard and those serving in active duty status, from being counted in federal adjusted gross income. This move is designed to alleviate the financial strain on service members and their families, recognizing their contributions and sacrifices.

Additionally, the bill introduces measures to address the growing issue of medical debt. Starting in 2024, individuals will be able to reduce their federal adjusted gross income by the amount of medical debt discharged under the Medical Debt Relief Act. This provision aims to ease the financial burden on those who have faced significant medical expenses, allowing them to regain financial stability.

The bill has sparked discussions among lawmakers, with proponents highlighting its potential to support military families and those struggling with medical debt. However, some critics express concerns about the long-term fiscal implications of these tax reductions on state revenue.

As Nebraska moves forward with LB28, the implications could be far-reaching. Experts suggest that if passed, the bill could not only provide immediate financial relief but also encourage more individuals to seek necessary medical care without the fear of crippling debt. The next steps will involve further legislative debate and potential amendments as lawmakers weigh the benefits against the economic impact on the state.