LINCOLN- On Wednesday, state lawmakers voted to reinstate income taxes on federal retirees, saying that they made a mistake in eliminating them last year. They also ditched a proposal to provide homestead exemptions for partially disabled veterans, a move made to reduce the budget impact of a large tax package.

These actions came as lawmakers debated Sen. Linehan's LB1317, which brought together ten tax-related bills. The repeal of the federal retiree tax exemptions is expected to increase state revenues by $12 million annually. Sen. Carol Blood attempted to revive the exemptions, but her amendment failed.

Blood said lawmakers were sending the message to voters that "we're going to give you something, then take it back." Sen. Linehan argued that her intent last year had been to exempt retirement income only for federal employees who had started before 1984 and were not able to participate in Social Security. However, the actual law that passed applied to every federal retiree in the state.

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