Nebraska tax relief bill passes
The Nebraska Legislature passed LB873 with a vote of 43-0, and on April 13 2022, Gov. Pete Ricketts signed the bill into law. LB873 changes provisions relating to corporate and individual income taxes, taxation of social security benefits, and property tax credits.
The Nebraska Property Tax Incentive Act (LB1107) was passed in 2020 to provide an additional funding mechanism for property tax relief. LB873 was brought forth during the second half of the 107th Legislature to adjust the work of LB1107 by total preserving income tax credits available for property taxes paid to local schools at $548 million and boosting the total to $561 million for 2023. Additionally, LB873 adjusts LB1107 by including an additional $201 million in relief for property taxes paid to community colleges. These adjustments equate to tax savings for property taxes paid to community colleges on top of the refundable income tax credits for property taxes paid to K-12 schools, approximately 25 percent of property taxes paid to K-12 schools in 2021.
In addition to property tax relief, the proposal also lowers income taxes over the next five years by lowering the individual income tax rate from 6.84 percent to 5.84 percent and lowers the corporate income tax rate from 7.1 percent to 5.84 percent The measure also expedites the elimination of income taxes paid on social security income. LB873 was a combination of several bills that were unable to pass individually so they were packaged together.
Nebraska Cattlemen have been working hard with senators and other groups to identify and expand property tax relief. The funding for community college from property taxes was an area they focused on. Community colleges now will receive their funding directly from the government surplus instead of from property taxes. Property owners will need to file the proper forms with their Nebraska income taxes in order to claim the 25 percent credit back on property taxes paid to schools. This will be available to all homeowners not just farmers and ranchers. “With the age of our ag population it’s usually the older folks who don’t have kids in the school system who are paying the bulk of the taxes so with this bill the relief gets to the people who are paying it,” said Dick Pierce, outgoing tax chairman for the Nebraska Cattlemen. “Property owners need to apply to get 25 percent back as a credit when they file their personal income taxes. This bill removed the ceiling for the tax credit fund.”
Pierce said they had faced some opposition from those who were concerned about funding for community colleges and didn’t understand how they would receive funding. He also mentioned that the money for the relief is because the current state administration has been very fiscally responsible by keeping spending down and has created money reserves. But he worries that the next governor could with the stroke of a pen take away the property tax credit funds. “In ag we carry most of the load when it comes to property taxes but this bill is not just for farmers and ranchers. Urban dwellers thought they weren’t going to get anything but they do.”
Brenda Masek, president of Nebraska Cattlemen released the following statements:
“Nebraska Cattlemen is proud to have played a key role in pushing the largest tax relief package ever in the history of our great state across the finish line. Specifically, the 201 million dollars in property tax relief for Nebraskans who are upset with paying high taxes for community colleges, is a direct result of the work we completed last winter in the Nebraska Cattlemen Taxation working group. From the expansion of crucial property tax relief to lowering personal and corporate income taxes to make Nebraska more competitive with neighboring states and expediting the elimination of income taxes paid on social security, nearly all Nebraskans will undoubtedly benefit from this landmark legislative package.” She continued, “Nebraska Cattlemen is grateful for the thoughtful consideration and collaboration of Sens. [Lou Ann] Linehan, [Dist. 39], [Curt] Friesen, [Dist. 34], [Tom] Briese, [Dist. 41], and [Brett] Lindstrom, [Dist. 18], to build a multifaceted tax proposal that touches nearly all Nebraskans. We also commend Gov. Ricketts for his continued support of tax relief and reform by signing LB873.”
Pierce thinks that the removing of income tax on social security income will be huge for retirees and might help encourage them to stay in the state. Also that the lowering of the personal income and corporate tax rate will make the state more appealing for young folks and businesses. “Nebraska has been high on the list of states that tax and property taxes have a ways to go, but anything we can do to lessen our taxes helps, more money in our pockets in turn helps. We have more work to do but this is a step in the right direction. We still have to have tax reform, the system rewritten — overhauled, so it becomes more of a permanent thing,” Pierce said.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User
On May 16, USDA announced that some commodity and specialty crop producers impacted by natural disasters in 2020 and 2021 will soon be eligible to receive emergency relief payments totaling about $6 billion to offset…