diff --git a/changelog_entry.yaml b/changelog_entry.yaml
index e69de29bb2d..77cfbd61493 100644
--- a/changelog_entry.yaml
+++ b/changelog_entry.yaml
@@ -0,0 +1,4 @@
+- bump: minor
+  changes:
+    added:
+    - 2022 Nebraska military retirement benefit exclusion.
diff --git a/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/military_retirement/fraction.yaml b/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/military_retirement/fraction.yaml
new file mode 100644
index 00000000000..912f4d10821
--- /dev/null
+++ b/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/military_retirement/fraction.yaml
@@ -0,0 +1,19 @@
+description: Nebraska subtracts this fraction of military retirement benefits from federal adjusted gross income.
+values:
+  2021-01-01: 0.4
+  2022-01-01: 1
+
+metadata:
+  label: Nebraska military retirement subtraction fraction
+  unit: /1
+  period: year
+  reference:
+  - title: 2021 Nebraska Individual Income Tax Booklet
+    href: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/f_1040n_booklet.pdf#page=16
+  - title: 2022 NE income tax form and instruction booklet
+    href: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/2022_Ne_Individual_Income_Tax_Booklet_8-307-2022_final_8.pdf#page=3
+  - title: 2023 Nebraska Individual Income Tax Booklet
+    href: https://revenue.nebraska.gov/sites/revenue.nebraska.gov/files/doc/tax-forms/2023/incometax/f_1040n_booklet_2023_Final.pdf#page=19
+  - title: Nebraska Revised Statute 77-2716(15)
+    href: https://nebraskalegislature.gov/laws/statutes.php?statute=77-2716
+
diff --git a/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/subtractions.yaml b/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/subtractions.yaml
index bbaf5b84e5e..36805de55a8 100644
--- a/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/subtractions.yaml
+++ b/policyengine_us/parameters/gov/states/ne/tax/income/agi/subtractions/subtractions.yaml
@@ -2,9 +2,11 @@ description: Nebraska subtracts these sources from adjusted gross income.
 values:
   2021-01-01:
     - ne_social_security_subtraction
+    - ne_military_retirement_subtraction
   2024-01-01:
     - ne_social_security_subtraction
     - taxable_public_pension_income
+    - ne_military_retirement_subtraction
     
 
 metadata:
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ne/tax/income/adjusted_gross_income/ne_military_retirement_subtraction.yaml b/policyengine_us/tests/policy/baseline/gov/states/ne/tax/income/adjusted_gross_income/ne_military_retirement_subtraction.yaml
new file mode 100644
index 00000000000..37479df0dbc
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/states/ne/tax/income/adjusted_gross_income/ne_military_retirement_subtraction.yaml
@@ -0,0 +1,19 @@
+- name: Test 1,  for 2022
+  absolute_error_margin: 0.01
+  period: 2022
+  input:
+     military_retirement_pay: 30_000
+     state_code: NE
+  output:
+    ne_military_retirement_subtraction: 30_000
+
+- name: Test 2, for 2021
+  absolute_error_margin: 0.01
+  period: 2021
+  input:
+     military_retirement_pay: 30_000
+     state_code: NE
+  output:
+    ne_military_retirement_subtraction: 12_000
+
+
diff --git a/policyengine_us/variables/gov/states/ne/tax/income/adjusted_gross_income/subtractions/ne_military_retirement_substraction.py b/policyengine_us/variables/gov/states/ne/tax/income/adjusted_gross_income/subtractions/ne_military_retirement_substraction.py
new file mode 100644
index 00000000000..dc27aa4c71f
--- /dev/null
+++ b/policyengine_us/variables/gov/states/ne/tax/income/adjusted_gross_income/subtractions/ne_military_retirement_substraction.py
@@ -0,0 +1,20 @@
+from policyengine_us.model_api import *
+
+
+class ne_military_retirement_subtraction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "Nebraska military retirement subtraction"
+    unit = USD
+    definition_period = YEAR
+    defined_for = StateCode.NE
+
+    def formula(tax_unit, period, parameters):
+        p = parameters(
+            period
+        ).gov.states.ne.tax.income.agi.subtractions.military_retirement
+        military_retirement_benefits = add(
+            tax_unit, period, ["military_retirement_pay"]
+        )
+        # From 2015 to 2021, the tax filer may elect to exclude 40% of the military retirement benefit income for 7 consecutive years or elect to receive 15% exclusion for all tax years after age 67.
+        return military_retirement_benefits * p.fraction