2023 Nebraska Legislative Changes
Adopt the Opportunity Scholarships Act (LB753 – Operative January 1, 2024)
This Act establishes a program to provide scholarships for eligible students to attend qualified privately operated elementary and secondary schools in Nebraska. The scholarships are funded by cash contributions made to scholarship-granting organizations, which may qualify the donor for a nonrefundable tax credit. The following summarizes the tax credit, and scholarship-granting organizations.
Nonrefundable Tax Credit
For taxable years beginning on or after January 1, 2024, individuals and entities that make cash contributions to a certified scholarship-granting organization may qualify for a nonrefundable tax credit. Taxpayers may not designate all or any part of a contribution to benefit a specifically identified eligible student.
Taxpayers must notify the scholarship-granting organization of their intent to make a contribution and the amount to be claimed as a tax credit. The organization will notify the Nebraska Department of Revenue (DOR) of the intended contribution. DOR will process notifications in the order received within 30 days of receipt. DOR will reserve the tax credits until the annual limit reaches $25 million for calendar years 2024, 2025, and 2026. For calendar years 2027 and after, the annual limit will be calculated based on the requirements in LB 753. The organization will issue a receipt for the contribution made by the taxpayer to take the nonrefundable tax credit.
The nonrefundable tax credit issued to an individual, corporate taxpayer, estate, trust, or to any partnership, limited liability company (LLC), or subchapter S corporation that is carrying on rental activity or carrying on any trade or business for which deductions would be allowed under IRS § 162; equals the lesser of:
(a) The total amount of the contributions made to the scholarship-granting organizations during the tax year;
(b) 50% of the income tax liability of the taxpayer for such year; or
(c) $100,000, or $1 million for estates and trusts.
Any unused credit may be carried forward for the next five years after the credit was first granted. A taxpayer may only claim a credit on the portion of the contribution that was not claimed as a charitable contribution on their federal return. Married filing separate taxpayers that could have filed a joint return may each claim one-half of the credit. The credit must be attributed to each partner, member, or shareholder in the same proportion used to report the entity’s income or loss for income tax purposes. For estates or trusts, any credit not used by the estate or trust may be attributed to each beneficiary in the same proportion used to report the beneficiary’s income from the estate or trust for income tax purposes.
The contributions are processed by a certified scholarship-granting organization (organization) which awards the scholarships to eligible students. An organization wishing to become certified must submit an application to DOR. Certification must be obtained prior to providing any education scholarships to eligible students under the Act. The organization applying to be certified as a scholarship-granting organization must be exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code of 1986 as amended. The organization is required to prioritize eligible students when granting the scholarships and follow tuition limitations set forth in LB 753. The organization is required to submit a report to DOR on an annual basis which includes financial information certified by an independent public accountant, a summary description of its policies and procedures for awarding education scholarships, the number of eligible students who received education scholarships, the total contributions received, and the total amount of education scholarships awarded. The Act also has requirements on organizations for allocating revenue for education scholarships and administrative costs.
Child Care Tax Credit Act (LB754 – Sections 1 through 5, Operative taxable years beginning on or after January 1, 2024)
This Act establishes two separate tax credits for tax years beginning on or after January 1, 2024 that require taxpayers to submit an application to DOR.
Refundable Tax Credit
Parents or legal guardians of children 5 years old or younger may apply to DOR to receive a refundable tax credit. The parent or legal guardian must claim the child as a dependent for federal income tax purposes. The parent or legal guardian is eligible for the refundable tax credit if:
- The child is enrolled in a child care program licensed pursuant to the Child Care Licensing Act;
- The child receives care from an approved license-exempt provider enrolled in the child care subsidy program pursuant to Neb. Rev. Stat. §§ 68-1202 and 68-1206; or
- The parent’s or guardian’s total household income is less than or equal to 100% of the federal poverty level.
Total household income means federal modified adjusted gross income.
The refundable tax credit amount is based on the parent’s or legal guardian’s total household income. The credit will equal:
- $2,000 per child, if the total household income is no more than $75,000; or
- $1,000 per child, if the total household income is more than $75,000 but no more than $150,000.
- Zero, if the total household income is more than $150,000.
The parent or legal guardian’s application and supporting documentation will be used to certify the refundable tax credit. The applications will be used to reserve the tax credits for the individual to claim on their Nebraska individual income tax return. The applications will be processed in the order received until the annual limit reaches $15 million.
Nonrefundable Tax Credit
This Act provides nonrefundable tax credits to taxpayers who make qualifying contributions during the tax year and submit an application to DOR. Under this Act, taxpayer means any person subject to the income tax imposed by the Nebraska Revenue Act of 1986. The term includes resident and nonresident individuals, estates, trusts, and corporations.
The credit will equal 75% or 100% of the qualifying contribution, not to exceed $100,000 for any single year. A qualifying contribution means a contribution of cash, check, cash equivalent, agricultural commodity, livestock, or publicly traded security that is made:
- For the establishment or operation of an eligible program;
- For the establishment of a grant or loan program for parents requiring financial assistance for an eligible program;
- To an early childhood collaborative or another intermediary to provide training, technical assistance, or mentorship to child care providers;
- For the establishment or ongoing costs of an information dissemination program that assists parents with information and referral services for child care;
- To a for-profit child care business, including family home providers. The for-profit child care business must use the proceeds of a qualifying contribution for:
- The acquisition or improvement of child care facilities,
- The acquisition of equipment,
- Providing services,
- Employee retention.
- To an intermediary for the establishment or operation of an eligible program or for the establishment of a grant or loan program for parents requiring financial assistance for an eligible program.
A contribution will not qualify for a credit if the contribution is made to a child care provider in which the taxpayer or a person related to the taxpayer has a financial interest, unless the contribution is part of a bona fide arm's length transaction.
For the nonrefundable tax credit to equal 100% of the contribution, the taxpayer must make a qualifying contribution to:
- An eligible program with a physical presence in an opportunity zone in this State designated pursuant to the federal Tax Cuts and Jobs Act, Public Law 115-97; or
- An eligible program with at least one child enrolled in the child care subsidy program established pursuant to Neb. Rev. Stat. §§ 68-1202 and 68-1206, and the child care provider is actively caring and billing for the child.
If the above is not met, the nonrefundable tax credit will equal 75% of the contribution. Any unused credit may be carried forward for the next five years after the credit was first granted but must be used in the earliest year possible. A taxpayer may only claim a credit on the portion of the contribution that was not claimed as a charitable contribution on their federal return.
The taxpayer is required to submit an application to DOR with documentation supporting a qualifying contribution was made. DOR will process the applications in the order received until the certified credits reach the annual limit of $2.5 million.
School Readiness Tax Credit Act Restored with Updated Tax Credit Amounts (LB754 – Section 17 through 19, Operative for taxable years beginning on or after January 1, 2024)
This Act provides two separate income tax credits beginning with tax year 2024. First is a nonrefundable income tax credit to persons who own or operate an eligible child care and education program that serves children who participate in the child care subsidy program established in Neb. Rev. Stat. § 68-1202. The credit to the provider is equal to the average monthly number of subsidy children who attend the provider's program multiplied by a dollar amount based on the quality scale rating of the eligible program:
Step Five $1,200
Step Four $1,000
Step Three $800
Step Two $600
Step One $400
Second is a refundable income tax credit to staff members who are both employed with an eligible program for at least six months during the taxable year and are classified in the Nebraska Early Childhood Professional Record System. Eligible staff members receive a credit equal to:
Level Five $3,500
Level Four $3,200
Level Three $2,900
Level Two $2,600
Level One $2,300
The providers and staff members must first apply to the DOR for the taxpayer to receive certification of the tax credit. Applications will be processed in the order received. The total amount of credits available under the Act is limited to $7.5 million for each tax year.
Individual and Fiduciary Income Tax Rate Changes (LB754 – Section 7, Operative for taxable years beginning on or after January 1, 2024)
LB 754 reduces the maximum tax rate of 6.64% for income tax imposed on individuals and fiduciaries for taxable years beginning on or after January 1, 2024, and reduces the third tax bracket rate for taxable years beginning on or after January 1, 2026 as follows:
- 5.84%, 5.01% for taxable years beginning on or after January 1, 2024, and before January 1, 2025;
- 5.20%, 5.01% for taxable years beginning on or after January 1, 2025, and before January 1, 2026;
- 4.55%, 4.55% for taxable years beginning on or after January 1, 2026, and before January 1, 2027;
- 3.99%, 3.99% for taxable years beginning on or after January 1, 2027.
The corporation income tax rate on Nebraska taxable income (NTI) for taxable years beginning on and after January, 1, 2024 is reduced. The applicable tax rate for each taxable year is listed below.
- 5.58% on the first $100,000 of NTI and 5.84% of NTI in excess of $100,000 for taxable years beginning on or after January 1, 2024, and before January 1, 2025;
- 5.20% on all NTI for taxable years beginning on or after January 1, 2025, and before January 1, 2026;
- 4.55% on all NTI for taxable years beginning on or after January 1, 2026, and before January 1, 2027;
- 3.99% on all NTI for taxable years beginning on or after January 1, 2027.
Social Security Benefit Exclusion (LB754 – Section 9, Operative for taxable years beginning on or after January 1, 2024)
For taxable years beginning on or after January 1, 2024, a taxpayer’s federal adjusted gross income (AGI) is reduced by the amount of social security benefits received to the extent included in federal AGI.
Federal Retirement Income Exclusion (LB754 – Section 9, Operative for taxable years beginning on or after January 1, 2024)
For tax years beginning on or after January 1, 2024, a taxpayer’s federal AGI is reduced by amounts received as annuities under the Federal Employees Retirement System or the Civil Service Retirement System that were earned from employment with the federal government to the extent included in federal AGI.
Nebraska Educational Savings Plan (LB727 – Section 106, September 2, 2023)
Clarifies Nebraska Educational Savings Plan nonqualified withdrawals do not include distributions from an account for a rollover to a Roth individual retirement account as permitted by section 529 of the Internal Revenue Code.
Individual income tax deduction for health insurance premiums paid by retired firefighters (LB727 – Section 70, Operative for tax years beginning on and after January 1, 2023)
Expands an income tax deduction to include firefighters. The health insurance premiums paid by the firefighter may be deducted to the extent the premiums were not previously deducted in determining the retiree’s federal AGI. The deduction previously was limited to certified law enforcement officers. The retiree must meet the following requirements to claim the deduction:
- The retired individual was employed full time as a firefighter or certified law enforcement officer for at least 20 years, and
- The individual must be at least 60 years of age as of the end of the taxable year the deduction is claimed.
Law Enforcement and Firefighter and their Legal Dependents Tuition Waiver (LB 727 – Sections 107 through 113, Operative date September 2, 2023)
Renames the Law Enforcement Education Act to the First Responder Recruitment and Retention Act (Act). The Act expands the resident tuition waiver for law enforcement officers (officer) to include professional firefighters (firefighter) and their legal dependents (dependent). The tuition waiver (waiver) includes tuition to the University of Nebraska, state colleges in the Nebraska state college system (Chadron State College, Peru State College, and Wayne State College) and community colleges located within the State of Nebraska (collectively, educational institution). The waiver is 100% of resident tuition charges after financial aid for pursuing an associate or baccalaureate degree program that relates to their career. A dependent of a law enforcement officer or firefighter is not required to pursue studies that lead to a specific career.
Beginning September 2, 2023, and each year thereafter, the first responder or dependent requests a tuition waiver from the educational institution the following documentation must be filed and verified with DOR before applying to the educational institution for the waiver:
- Proof of employment as an officer or firefighter; and
- Proof of residence in Nebraska.
The officer, firefighter, or their dependent may receive the waiver for up to five years if they continue to be eligible for participation. For the dependent, the five years of tuition waiver eligibility starts once the dependent applies for and receives the waiver for the first time. The waiver is available to the dependent for the next consecutive five years. The dependent must sign an agreement with terms that include residing in the state of Nebraska, filing a tax return documenting the waiver recipient resides in Nebraska for a period of five years following graduation, and, agreeing to repay the waived tuition, upon request by the educational institution, if the waiver recipient fails to file annual Nebraska resident tax returns.
The five-year residency requirement begins to run after use of the first tuition waiver and:
- Completion of the five-year tuition waiver eligibility;
- Completion of an undergraduate degree at a state college and state university;
- Completion of a two-year degree at a community college and requires recipient to notify DOR that the recipient doesn’t intend to pursue an undergraduate degree or additional two-year degree using tuition waivers under this Act; or
- Recipient notifies DOR that recipient does not plan to use additional tuition waivers under the Act.
Achieving a Better Life Experience Program (LB 727 – Section 48, Operative September 2, 2023)
Changes provisions of the Achieving a Better Life Experience (ABLE) program. If the balance of an account on the date of death of the designated beneficiary is less than or equal to $5,000, the account owner or personal representative of the designated beneficiary may have the balance distributed to an individual or individuals specified by the designated beneficiary, the account owner, or the personal representative of the designated beneficiary.
Changes to the School District and Community College Property Taxes Paid under the Nebraska Property Tax Incentive Act (LB 727 – Section 98, Operative September 2, 2023)
The Nebraska Property Tax Incentive Act is amended to exclude from community college and school district property taxes paid any payments that were delinquent for five years or more at the time of payment.
Credit for Tax Paid to Another State Expanded (LB754 – Section 12, Operative June 1, 2023)
The credit for tax paid to another state for a resident individual, estate, or trust is expanded to include tax paid by a partnership or S corporation in another state, when the partnership or S corporation is also subject to Nebraska income tax.
Nonrefundable income tax credit to grocery store retailers, restaurants, and agricultural producers for food bank, food pantry, or food rescue donations (LB 727 – Section 77, for taxable years beginning on or after January 1, 2024)
Establishes a nonrefundable tax credit against the income tax imposed by the Nebraska Revenue Act to any grocery store retailer or restaurant that donates food to a food bank, food pantry, or food rescue during the taxable year; and any agricultural producer that makes a qualifying agricultural food donation to a food bank, food pantry, or food rescue during the taxable year. Any amount relating to such food donations or qualifying agricultural food donations that was subtracted from the taxpayer's federal AGI or federal taxable income must be added back in the determination of Nebraska adjusted gross income or taxable income before the credit provided in this section may be claimed. The credit amount is equal to 50% of the value of the donations made during the taxable year, not to exceed $2,500. Taxpayers may carry forward unused credits to any of the three subsequent tax years.
Food donated by grocery stores and restaurants will be valued at its wholesale value. A qualifying agricultural food donation is valued at the prevailing market value of the product at the time of donation, plus the direct cost incurred by the agricultural producer for processing the product. Taxpayers must submit an application to receive the credit. DOR may approve zero dollars of credits each year. Any rejected food donation does not qualify for the credit.
Pass-through Entities Election to be Subject to Income Tax (LB754 – Sections 11 through 13, and 16, Operative June 1, 2023 )
A partnership and small business corporation may make an annual irrevocable election to be subject to Nebraska income tax. A separate election must be made for each tax year beginning on and after January 1, 2018. The election applies to all returns filed for the year covered by the election.
The income tax liability is computed at the highest individual income tax rate on the pass-through entity's net income apportioned to Nebraska. A nonresident individual partner or shareholder will not be required to file a Nebraska income tax return if all their Nebraska source income is from electing partnerships or S corporations and their share of the taxes paid by the electing partnership or S corporation satisfied their Nebraska income tax liability. When computing the partner’s or shareholder’s tax liability, their share of the Nebraska income taxes deducted on the federal return by the partnerships or S corporation must be added back.
Partners and shareholders may claim a refundable credit equal to their share of the Nebraska income tax paid by an electing partnership or S corporation. Partners or shareholders that are corporations, individuals, financial institutions, estates, or trusts may apply any overpayment to the subsequent tax year.
When a partnership or S corporation is a partner of an electing partnership, the refundable credit may be distributed to the partners or shareholders in the same manner as income or applied against the partner’s tax, interest, and penalty. If the credit is claimed by the partnership or the S corporation, any related overpayment may be refunded or applied to the subsequent tax year. The overpayment applied to the subsequent year by a partnership is limited to the portion of the overpayment that resulted from the credit for taxes paid by the partnership. No other portion of a partnership’s overpayment may be applied to the subsequent year.
When an electing partnership is a partner in an electing partnership, it may claim a credit for the taxes paid by the lower tier. If claiming the credit, the upper tier electing partnership must distribute to its partners a credit for taxes paid by itself and all its lower tier electing partnerships. The statute of limitations for filing a claim for credit or refund by partners or shareholders of an electing partnership or S corporation is extended to the time specified in Neb. Rev. Stat. § 77-2793 or January 1, 2026, whichever is later. The Tax Commissioner will not pay interest to the partners or shareholders on any related refund. The Tax Commissioner may issue a proposed notice of deficiency to an electing partnership, S corporation, or its owners within one year from the date a partnership or S corporation files its election. Any notice of deficiency determination mailed to an electing partnership or S corporation may be enforced within six years from the date of the notice of deficiency determination. The provisions in this paragraph are limited to tax years beginning after January 1, 2018 and before January 1, 2023.
A partnership may also elect to pay income tax on an amended return if the amended return is required to be filed as a result of a change or correction to the partnership's federal adjusted gross income, taxable income, or the tax liability reported on their federal income tax return and the change or correction is by the Internal Revenue Service or as the result of a renegotiation of a contract or subcontract with the United States. A partnership may also elect to pay income tax on an amended return required to be filed as a result of a change or correction in another state when such change or correction is material to the tax liability owed to this state. In either case, the tax is computed at the highest individual income tax rate on the net positive and negative adjustments of partnership items. The partners of a partnership making this election are not required to file a Nebraska amended return or pay Nebraska tax, penalty, or interest on the changes.
For tax years beginning on and after January 1, 2024, electing partnerships and S corporations will be required to make estimated tax payments as if they were a corporation. An electing partnership or S corporation that incurs a net operating loss cannot carry the loss forward to succeeding taxable years.
Sales and Use Taxes
Buyer-based exemption (LB 727 – Sections 62 and 66 through 68, Operative July 1, 2026)
Beginning July 1, 2026, a construction contractor may purchase materials tax-exempt based on the buyer-based exemption of the contractor's client. Buyer-based exemption means an exemption based on who purchases a product. An exemption available to all individuals is not a buyer-based exemption. The provisions relating to purchasing agent appointments were expanded as follows:
- A client eligible for the buyer-based exemption may appoint construction contractors as purchasing agents to make tax-free purchases of materials that will be physically annexed to the structure and which subsequently belong to the client.
- The appointment of purchasing agents will be in writing and occur prior to having any buyer-based tax exempt items annexed to real estate during construction, improvement, or repair. If the client fails to timely appoint the purchasing agent, the client may apply for a refund for any sales or use tax paid by the contractor on the exempt materials.
- The construction contractor who has been appointed as a purchasing agent may purchase the materials tax free, or may apply for a refund of or use as a credit against a future use tax liability the tax paid on inventory items annexed to real estate in the construction, improvement, or repair of a project that belongs to the client who is eligible for the buyer-based exemption.
Agricultural Machinery and Equipment Exemption (LB 727 – Section 65, Operative October 1, 2023)
The agricultural machinery and equipment exemption was expanded to include baling wire and twine purchased for use in commercial agriculture to bail livestock feed or bedding. The law changes the exemption for net wrap by requiring the net wrap to be used in baling of livestock feed or bedding.
Exemption for Nonprofit Organizations Expanded (LB 727 – Section 63, Operative October 1, 2023)
Neb. Rev. Stat. § 77-2704.12 is amended to include an additional organization to be recognized as a sales tax exempt nonprofit organization. The exemption will now include any nonprofit organization certified or contracted by a regional behavioral health authority or the Division of Behavioral Health of the Department of Health and Human Services to provide community-based mental health or substance use services.
Exemption for Governmental Projects Expanded (LB 727 – Section 64, Operative July 1, 2023)
The exemption to include purchases by a nonprofit corporation for governmental unit projects paid in whole or in part with redevelopment bonds was expanded. A sales tax exemption for a nonprofit corporation making a lease-purchase agreement, financing lease, or other instrument for a governmental unit’s expenditures towards a project is provided. The project does not need the voters’ approval when the expenditures are paid for with redevelopment bonds. Project means the acquisition of real property, or the construction of a public building and the amount is the greater of $50,000 or 6/10ths of 1% of the total purchase agreement, financing lease, or other instrument as of the end of the governmental unit’s prior fiscal year.
Sales Tax Diversion Extension (LB 727 – Section 73, Operative July 1, 2023)
Extends the diversion of one quarter cent of the State sales tax (not including motor vehicle, motorboat, and ATV sales tax) from the General Fund to the Highway Trust Fund (85%) and the Highway Allocation Fund (15%) from a current end date of July 1, 2033, to July 1, 2042.
Change the Distribution of Sales Tax Revenue on Aircraft (LB727 – Section 73 and 100, Operative July 1, 2023)
The Aeronautics Capital Improvement Fund is created. The sales and use taxes imposed on the sale or lease of aircraft as defined in Neb. Rev. Stat. § 3-101, are directed to the Aeronautics Capital Improvement Fund. Aircraft means any contrivance now known, hereafter invented, used, or designed for navigation of or flight in the air. The Fund will be administered by the Department of Transportation and will be used to build, repair, renovate, rehabilitate, restore, modify, or improve any infrastructure at any public-use airport licensed by the Division of Aeronautics of the Department of Transportation.
LB 92 allows Nebraska-based entities participating in the federal Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act to make an application under the ImagiNE Nebraska Act.
LB 727 expands the definition of a qualified location under the ImagiNE Nebraska Act to include locations where waste treatment and disposal activities, as defined under NAICS 5622, are conducted. This includes waste treatments and disposal, hazardous waste treatment and disposal, solid waste landfills, solid waste combustors and incinerators, and other nonhazardous waste treatment and disposal activities.
Adopt the E-15 Access Standard Act and change provisions of the Nebraska Higher Blend Tax Credit Act, and the Beginning Farmer Tax Credit Act (LB562 – Operative September 2, 2023)
E-15 Access Standard Act
The E-15 Access Standard Act is created, administered by the Department of Agriculture (NDA), to increase consumer access to E-15 gasoline. Beginning January 1, 2024, E-15 gasoline must be sold from at least 50% of all qualifying motor fuel dispensers located at a new retail motor fuel site, or an existing retail motor fuel site that replaces more than 80% of the motor fuel storage and dispensing infrastructure. NDA may allow a small retail motor fuel site to file for exception from the requirement.
Licensed motor fuel retailers must file a quarterly return with the Department of Revenue (DOR) reporting the number of motor fuel gallons sold and the percentage of ethanol in the fuel sold for each location. If the statewide ethanol blend rate is less than 14% for 2027, then beginning in 2028, if a retail dealer is not subject to the exception, the retail dealer must sell E-15 from at least one qualifying motor fuel dispenser. In certain circumstances, the Governor may issue or renew an executive order that temporarily suspends the E-15 access standard.
NDA may request DOR to determine whether a particular retail motor fuel site’s average annual gasoline gallonage from January 1, 2021, through December 31, 2023 was 300,000 gallons or less, based on motor fuels tax returns filed with DOR by the retail dealer. The information is confidential and shall be used for the limited purposes of evaluating a retail dealer’s compliance. DOR may adopt and promulgate rules and regulations. Starting in 2025, DOR and the Department of Environment and Energy (NDEE) will annually issue a joint report identifying the statewide ethanol blend rate, which is the average percentage of ethanol contained in each gallon of motor fuel sold in this state.
Nebraska Higher Blend Tax Credit Act
The Nebraska Higher Blend Tax Credit Act (HBTC) is amended to redefine E-15 as blended gasoline with more than 10% but no more than 15% ethanol. For each gallon of E-15 or higher blended gasoline sold by a retail dealer, HBTC credits will equal 8 cents for calendar year 2024, 9 cents for 2025, 8 cents for 2026, 7 cents for 2027, and 5 cents for 2028. The credit cap for calendar years 2024 to 2028 is increased from $4 million to $5 million. The sunset date for new applications under the Act was extended to December 31, 2028.
Beginning Farmer Tax Credit Act
The Beginning Farmer Tax Credit Act (Act) is amended to redefine farm to mean any improved or unimproved tract of land used for or devoted to the commercial production of farm products. The three individuals currently engaged in farming or livestock production who must be members of the board are no longer required to be from each congressional district. The definition of qualified beginning farmer or livestock producer is changed in two ways. Along with the other requirements, the individual must:
(1) have a net worth of no more than $750,000 (increased from $200,000) and
(2) be of legal age to enter into and be legally responsible for a binding contract or lease as provided under Neb. Rev. Stat. § 43-2101.
The net worth thresholds are updated to be adjusted annually beginning October 1, 2023, and each October 1 thereafter, by taking the average Producer Price Index for all commodities, published by the U.S. Department of Labor Statistics, for the most recent 12 available periods divided by the Producer Price Index for 2022 and multiplying the result by the farmer’s or livestock producer’s net worth threshold.
The board is required to exclude from the net worth determination of the beginning farmer or livestock producer any pension, retirement, or other types of deferred benefit accounts owned by the beginning farmer or livestock producer, including such accounts owned by a spouse or dependent.
A one-time refundable income tax credit is provided for the cost of participating in the financial management program as required under the Act is no longer only allowed to beginning farmers or livestock producers who are in the first, second, or third year of a qualifying three-year rental agreement. The board’s review of a three-year rental agreements is changed from a semiannual basis to an annual basis. A $2 million annual cap is imposed on the owner of agricultural assets. The cap is based on the application year rather than the tax year credits are claimed. The sunset date is extended to December 31, 2027.
Expansion of the Nebraska Advantage Rural Development Act (LB 727 – Sections 74 and 75, Operative September 2, 2023)
The minimum level of investment for the Livestock Modernization level is reduced from $50,000 to $10,000 for applications submitted beginning January 1, 2024. The application fee is changed to $100 for investment of less than $25,000, $250 for investment of at least $25,000 but less than $50,000, and $500 for investment of $50,000 or more.
The annual cap of tentative tax credits that can be authorized is increased to $2 million from $1 million under the Nebraska Advantage Rural Development Act for Level 1 and Level 2 applications beginning in calendar year 2023.
Establish the Nebraska Biodiesel Tax Credit Act (LB 727 – Sections 1 through 8, effective January 1, 2024)
Establishes the Nebraska Biodiesel Tax Credit Act (BTC Act). The BTC Act provides that taxpayers who are retail dealers and who sold and dispensed biodiesel on a retail basis during the prior calendar year through a motor fuel pump located at the taxpayer’s retail motor fuel site are eligible to receive tax credits under the BTC Act. The tax credit equals 14 cents multiplied by the total number of gallons of biodiesel sold by the taxpayer on a retail basis during the prior calendar year through a motor fuel pump located at the taxpayer’s retail motor fuel site. The tax credit is refundable and may be used against any income tax imposed by the Nebraska Revenue Act of
1967. The credit may be claimed for taxable years beginning or deemed to begin on or after January 1, 2024.
Taxpayers must submit applications for the tax credit on a form prescribed by DOR from January 1 to April 15 of each calendar year. No new applications will be filed under the Act after December 31, 2028. All applications and credits pending or approved before that date will continue in full force and effect. The annual credit limit will not exceed $1 million. If the total amount of tax credits requested in any calendar year exceeds the limit, DOR will allocate the tax credits proportionally based upon amounts requested. DOR must consider applications in the order in which they are received, up to the annual credit limit. If DOR determines that an application is complete and the taxpayer is qualified for credits, DOR must approve the application and certify the credits, up to the limit established by the BTC Act.
Changes to the Nebraska Advantage Research and Development Act (LB 727 – Sections 95 through 97, Operative September 2, 2023)
The Nebraska Advantage Research and Development Act (R&D) is amended to change employer requirements for use of the E-Verify system for tax years that begin on or after January 1, 2023. Electronic verification of an employee hired during or after the first tax year for which the credit is claimed, and whose Nebraska taxable compensation is included in calculating the federal credit, may be performed within 90 days after the date of hire, or a longer period as permitted under the rules of the federal E-Verify system. If the verification is not performed within the prescribed time, or if the employee is determined to be ineligible to work in the United States, the compensation must be deducted from the qualified research expenses. No business will be allowed to first claim the credit for any tax year beginning after December 31, 2033.
Good Life Transformational Projects Act (LB 727 – Sections 9 through 15, Operative June 7, 2023)
The Good Life Transformational Projects Act creates a district that applies a sales tax rate of 2.75% for transactions occuring within an approved good life district (District). Applications must be filed on or before December 31, 2024, and be approved by the Department of Economic Development based on the ability of the District to generate new economic activity, create new jobs for residents, and promote new-to-market retail, entertainment, and dining attractions. Restrictions apply based on the size of city and county that the proposed District will be located within, such that a District located in a larger city and/or county must generate larger economic benefits. The applicant needs to demonstrate that the project will have 20% of sales generated from out-of-state residents or generate at least 600,000 out-of-state visitors per year for a project located in a county with a population of at least 100,000 people. The District cannot be larger than 2,000 acres.
Nebraska Job Creation and Mainstreet Revitalization Act (LB 727 – Sections 78 through 83, Operative September 2, 2023)
The Nebraska Job Creation and Mainstreet Revitalization Act is amended to extend the application date and final date to claim credits. Historically significant real property is expanded to include at grade or above ground structures. Improvement is redefined to include a project with a total cost of more than $5,000 regardless of location. The amount of credits available is increased to 25% of eligible expenses for properties located in a county that includes a city of the metropolitan class or a city of the primary class and 30% otherwise. Engineering costs now qualify as eligible expenses for purposes of the six month period prior to application. The maximum credit allowed for any single project is increased to $2 million. For calendar years beginning on or after January 1, 2024, the total amount of credits that may be allocated by the officer under this section in any calendar year will be limited to $2 million. Unallocated credits from prior years, if any, will continue to be carried forward.
Sports Arena Facility Financing Assistance Act (LB 727 – Sections 25 through 28, Operative Dates Indicated Below)
An eligible sports arena facility now includes privately owned concert venues, including stages, dressing rooms, concession areas, parking facilities, lobby areas, and onsite administrative offices used in operating the concert venue. A concert venue is defined as an enclosed, temperature controlled building primarily used for live performances with a capacity of between 2,250 to a maximum of 3,500 persons (Operative June 6, 2023).
An applicant may apply for state assistance under the Act, if a building permit has been issued within the applicant's jurisdiction for a privately-owned concert venue. For privately owned concert venues, the state assistance may only be used by the applicant: (a) To pay back amounts expended or borrowed through one or more issues of bonds to be expended by the applicant to acquire, construct, improve, or equip a nearby parking facility; or (b) To promote arts and cultural events which are open to or made available to the general public. If the state assistance will be used to provide funding for promotion of the arts and cultural events, such state assistance to the political subdivision will no longer be available after ten years of funding or when state assistance reaches $100 million, whichever comes first (Operative July 1, 2023).
Convention Center Facility Financing Assistance Act (LB 727 – Sections 16 through 24, Operative Dates Indicated Below)
Applications for assistance under the Convention Center Facility Financing Assistance Act will be accepted until December 31, 2030. A municipality must own and operate the convention center, meaning non-profits and other private entities may no longer own or operate a convention center under the Act (Operative September 2, 2023). For projects approved after September 2, 2023, the turnback tax will include nearby retailers, in addition to hotels, who are within 600 yards of the facility (Operative July 1, 2023).
If a facility is within 600 yards of the State Capitol, the area used in determining nearby retailers or associated hotels subject to the turnback tax will be an area selected by the applicant that aggregates the same total amount of square footage had it not been within 600 yards of the State Capitol. This area will be depicted on a map submitted with the application (Operative September 2, 2023).
Changes to Inheritance Tax Reporting (LB 727 – Section 57, Operative June 6, 2023)
Petitioner's in a proceeding to determine inheritance tax must file an inheritance tax report with the county treasurer of the county in which the order determining inheritance is entered, summarizing the amount of inheritance tax revenue collected, by class of beneficiary. County Treasurers will report to DOR on the state fiscal-year basis by August 1st every year, except the first report will only cover January 1, 2023 to June 30, 2023. DOR will publish each county report and a statewide aggregate of the reports by September 1st each year on the DOR website.
Tobacco Products Tax Act (LB 727 – Sections 88 through 93, Operative January 1, 2024)
The definition of tobacco products under the Tobacco Products Tax Act is expanded to include electronic nicotine delivery systems (ENDS). The tax for ENDS containing three milliliters or less of consumable materials is $0.05 per milliliter. The tax for ENDS containing more than three milliliters of consumable materials is 10% of either (i) the purchase price of such ENDS paid by the first owner or (ii) the price at which the first owner who made, manufactured, or fabricated the ENDS sells the item to others. All revenue collected by DOR that is related to ENDS is remitted to the State Treasurer for credit to the General Fund.
Changes to the Nebraska Bingo Act and the Nebraska County and City Lottery Act (LB 775 – Operative September 2, 2023)
Digital on-premises tickets are defined as digital tickets purchased in person on a mobile or other electronic device verified to be present at the location of the lottery operator or an authorized sales outlet location in accordance with the Act. Gross proceeds do not include any admission costs collected at any location where the lottery is also available to the public free of any admission charge. In the definition of lottery, a provision is added that tickets are issued under the Act, “either (i) on paper or (ii) with the consent of the governing body of the county, city, or village conducting the lottery, digitally to a mobile or other device which, at the time of purchase, is verified to be present at the location of the lottery operator or an authorized sales outlet location.”
Additional payment methods were added which include debit card transactions of up to $200 per day, the cash balance of a payment application, a transfer from a bank account, or an account established in the player's name with the operator and funded as provided under Neb. Rev. Stat. § 9-646.01. Credit cards are explicitly not accepted for payment. For play accounts established with operators, the accounts may only be funded in the same manner as described above. In addition, a player may deposit prize money and refunds into the same play account.
All purchases of tickets must be made in person at a keno location. The operator will file with the DOR a list of locations using digital-on-premises ticket sales and will use “reasonable safeguards” approved by DOR to ensure the players are 19 years of age or older. Operators will submit controls to be approved by DOR for the following:
- Procedures and technology partner used to fulfill the requirements set forth by DOR;
- Any location detection procedures and require the boundaries be limited to the boundaries of the property;
- Any other controls designated by DOR;
- A process to prominently display and impose any limitation parameters relating to the purchase of a digital-on-premises ticket; and
- An easy and obvious method for a player to make a complaint and to enable the player to notify DOR if such complaint has not been or cannot be addressed by the lottery operator.
DOR may adopt rules and regulations related to digital-on-premises tickets, and such rules and regulations must be adopted by January 1, 2024.
Neb. Rev. Stat. § 9-204 was amended to make it possible for bingo players to use an electronic monitoring device to either automatic or manually help mark drawn (selected) spots on a bingo card.