Nebraska bill would extend state income tax exclusion to Guard members on Title 10 duty

Senator Bob Anderson told the Revenue Committee LB998 corrects an oversight in 2024 legislation (LB1394) that exempted many National Guard pay categories from Nebraska income tax but left service performed under Title 10 (federal active duty) taxable. Anderson said the bill would extend the exemption so Guardsmen are not financially penalized when mobilized for federal service.

Major General Craig Strong, the state Adjutant General, and retired Major General Richard Evans spoke in support. Strong said Nebraska has roughly 4,500 National Guard members and currently about 150 serving under Title 10, and he argued including Title 10 pay would simplify administration and support recruitment and retention. Evans explained why partial exemptions are hard to administer: federal W‑2s aggregate Title 10 and Title 32 pay in the same box, so requiring members to apportion amounts is burdensome and almost impossible for the state to validate.

Committee members asked whether reservists or other federal components would be covered; witnesses said the bill targets National Guard members because of their dual state/federal role and the governor’s control under Title 32, and they suggested any extension to other categories could be considered separately. The hearing closed after proponent testimony and one online proponent record.

Next steps: LB998 was left in committee for further consideration.