Gov. Pete Ricketts is proposing a tax exemption on military retirement pay in an effort to keep retirees from leaving the state.

Ricketts announced Friday that he will propose a bill to exempt half of the benefits paid to all military retirees. The measure would apply to an estimated 14,000 retirees in Nebraska and cost the state an estimated $15 million in lost revenue.

Ricketts says the bill is intended to replace a “clunky” state law that only provides a tax benefit to a smaller subset of military retirees.

Governor Ricketts told KFOR News afterward they are trying to keep up with surrounding states, who give similar breaks to retired military veterans.

“Both South Dakota and Wyoming have no income tax, so those military retirement benefits have no income tax at all,” Ricketts said.  “North Dakota is looking at doing something similar.”

Sen. Tom Brewer, of Gordon, will introduce the bill. Sen. Carol Blood, of Bellevue, who represents a large number of Offutt Air Force Base retirees, says many are moving to nearby Council Bluffs, Iowa, where they pay less in taxes.