Governor Jim Pillen signed multiple tax reform measures into law Wednesday morning.
The two bills, LB754 & LB243, both included emergency clauses, meaning they went into effect immediately upon signing,.
LB754 will gradually lower the top tier tax rate for individuals to 3.99 percent by tax year beginning January 1, 2027 and each tax year thereafter. LB754 will gradually lower the corporate income tax rate for all earnings in excess of $100,000 to 3.99 percent by tax year beginning January 1, 2027 and each tax year thereafter.
Opponents of the bill have argued that reductions for corporate & top personal income taxes are only going to be realized by the wealthiest Nebraskans. The Lincoln-based policy institute, OpenSky, has projected that three-quarters of the personal income tax benefit will go to the top 20% of Nebraska wage earners. Additionally, based on current corporate tax laws in Nebraska it’s estimated that 83% of the corporate tax cut will flow out of state. More specifically, Nebraskans with household incomes above $138,000 will see the bulk of the tax break. Households with taxable income under $32,950 would see no reduction.
Additionally, the bill includes an acceleration of a tax exemption for Social Security benefits by next year — one year earlier than originally anticipated.
LB754 also includes provisions of LB318, introduced by Sen. Eliot Bostar of Lincoln, which authorizes the state Department of Revenue to approve up to $15 million each year in refundable income tax credits intended to help parents and legal guardians pay for child care. The measure allows individuals, estates, trusts and corporations to apply for a nonrefundable state income tax credit of up to $100,000 for contributions they make to eligible child care programs. The department may approve $2.5 million in credits under the program each year. Finally, LB754 increases the amount of tax credits available for qualifying child care providers and employees under the School Readiness Tax Credit Act from $5 million to $7.5 million annually.
LB754 passed the legislature on May 25 on a vote of 39-2.
LB243 increases the amount of relief granted under the Property Tax Credit Act and establishes a cap of 3.0 percent annually on how much school districts can increase property tax requests – with some exceptions.
LB243 passed on May 25 on a vote of 44-0.