Opportunity Scholarship Act
(Repealed effective 10/30/2024)
General Information
The Opportunity Scholarship Act (Act) established by LB 753 (2023) was repealed by LB 1402 (2024), effective October 31, 2024. Scholarship Granting Organizations (SGO) looking for information regarding Nebraska’s participation in the federal scholarship and tax credit program established under Internal Revenue Code § 25F, should visit the Nebraska Department of Revenue’s (DOR) webpage for the Internal Revenue Code (IRC) § 25F, Qualified Elementary and Secondary Education Scholarships. Taxpayers looking for information regarding the federal tax credits under IRC § 25F should visit irs.gov.
With the repeal of the Act, the Nebraska Department of Revenue (DOR) is no longer accepting the Application to Become a Certified Nebraska Scholarship - Granting Organization, Form NSGO-A, for organizations to apply to become certified under the Act or the Opportunity Scholarship Act Notification of Intended Tax Credit, Form NSGO-IC to reserve tax credits under the Act.
For the taxable year beginning on or after January 1, 2024, individuals and entities that made cash contributions to a certified scholarship-granting organization (SGO) between January 1, 2024, and October 30, 2024, may have qualified for a nonrefundable tax credit under the Act. Taxpayers were required to notify the SGO of their intent to make a contribution and the amount to be claimed as a tax credit. Upon DOR’s verification of available credits, the taxpayer must have made the contribution within 60 days of notifying the SGO of their intent to contribute and prior to October 31, 2024.
For tax years beginning on or after January 1, 2024, the nonrefundable tax credit issued to an individual, corporate taxpayer, estates, trusts, or to any partnership, limited liability company (LLC), or subchapter S corporation equaled the lesser of:
- (a) The total amount of the contributions made to the scholarship-granting organizations during 2024;
- (b) 50% of the income tax liability of the taxpayer for tax year 2024; or
- (c) $100,000, or $1 million for estates and trusts.
After the above limitations were applied to determine the original allowable credit amount, any of the approved nonrefundable tax credit unused on the 2024 return may be carried forward and applied against the taxpayer’s income tax liability for the next five years immediately following the tax year in which the credit was first allowed.
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 50% tax liability limitation was computed on the total tax liability before any nonrefundable credits, refundable credits, withholding, or payments are applied on the 2024 income tax return. The total tax liability was multiplied by 50% to determine the credit limitation. If the donor taxpayer was not subject to income tax, the credit was not allowed and could not be distributed.
This credit could be claimed by an S corporation or partnership electing to pay tax. If a shareholder, beneficiary, or member claimed the credit based on a distribution from the pass-through entity, the credit was first limited by the tax lability of the passthrough entity. If the pass-through entity had not made the election to be subject to Nebraska income tax, the credit was not allowed and could not be distributed.
