2024 Nebraska Legislative Changes

Nebraska National Guard Income Exclusion (LB 1394 – Operative for Taxable Years Beginning on or After January 1, 2025)

For taxable years beginning on or after January 1, 2025, members of the Nebraska National Guard may exclude 100% of the National Guard income received, to the extent included in the federal adjusted gross income (AGI), who are serving in:

Active duty status attending drills, annual training, and military schools;
Active guard reserve;
Active duty for operational support duty status; or
State active duty.

Income received by individuals employed as a federal dual-status technician with the Nebraska National Guard is also excluded to the extent included in the federal AGI.

Repeal of the Opportunity Scholarships Act (LB 1402 – Operative July 19, 2024)

LB 1402 repeals the Opportunity Scholarships Act and appropriates funds to the State Treasurer for the purpose of providing education scholarships. Beginning October 31, 2024, the Nebraska Department of Revenue (DOR) will no longer certify any Scholarship- Granting Organizations (SGO) or accept any Forms NSGO-IC/X submitted by an SGO. Taxpayers who contributed to an SGO before October 31, 2024, and received a receipt from an SGO will remain eligible to claim the tax credit on their 2024 Nebraska Income Tax Returns. Any unused credit on the 2024 return may be carried forward for an additional five years.

Nebraska Pregnancy Help Act (LB 937 – Sections 24 through 33, Operative for Taxable Years Beginning on or After January 1, 2025)

This Act establishes a program to provide nonrefundable tax credits to taxpayers who make cash contributions to eligible charitable organizations that are pregnancy help organizations (eligible organizations) in Nebraska, during the taxable year. The following summarizes the nonrefundable tax credit and eligible organizations.

Nonrefundable Tax Credit

For taxable years beginning on or after January 1, 2025, individuals and entities that make cash contributions to eligible organizations during the taxable year may qualify for a nonrefundable tax credit.

Taxpayers must notify the eligible organization of their intent to make a contribution and the amount to be claimed as a tax credit. The organization will notify DOR of the intended contribution. DOR will process notifications in the order received within 30 days of receipt. If tax credits are available, DOR will notify the organization and, provided the contribution is timely made, the organization will issue a receipt for the contribution made by the taxpayer to take the nonrefundable tax credit.
DOR will reserve tax credits based on the following annual limitations for the State fiscal years:

July 1, 2025 to June 30, 2026 $ 500,000
July 1, 2026 to June 30, 2027 $1,000,000
State fiscal years after $1,000,000

Tax credits are prorated among notifications received on the day the annual limit is exceeded. In addition, no more than 50% of tax credits allowed for any State fiscal year can be for contributions to a single eligible organization.
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:

The total amount of the contributions made to eligible organizations during the tax year; or
50% of the income tax liability of the taxpayer for such year.

Any unused credit may be carried forward five years. The credit cannot be carried back. A taxpayer may only claim a credit on the portion of the contribution not claimed as a charitable contribution on their federal return. Married filing separate taxpayers 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.

Eligible Organizations

An organization wishing to become an eligible organization must provide a written certification to DOR that it meets the criteria of an eligible organization under the Act. The certification must include statements that the organization meets certain criteria of an eligible organization and verification of the organization’s exemption from federal income taxation under section 501(c)(3) of the Internal Revenue Code of 1986, as amended. An officer must sign the certification under penalty of perjury.

DOR will review the certification and notify the organization whether it meets the statutory criteria of an eligible organization. If approved, the organization is considered an eligible organization under the Act. DOR may periodically request recertification of eligible organizations and must make a list of eligible organizations available to the public. In addition, DOR must be notified within 60 days of any changes that affect the organization’s eligibility.

Individuals with Intellectual and Developmental Disabilities Support Act (LB 937 – Sections 34 through 42, Operative for Taxable Years Beginning on or After January 1, 2025)

This Act consists of three nonrefundable credits for employers and one refundable credit for direct support professionals for which taxpayers must apply to DOR. All applications must be certified by DOR. DOR may approve the four tax credits under the Act until the annual limitation for the State fiscal year is reached:

July 1, 2025 to June 30, 2026 $1,000,000
July 1, 2026 to June 30, 2027 $1,500,000
State fiscal years after $2,000,000

Nonrefundable Credits for Employers

An employer is eligible to receive a $500 nonrefundable credit for each direct support professional who was employed at least six months and worked at least 500 hours for the employer during the taxable year.

An employer is eligible to receive a $1,000 nonrefundable credit for each employee who is receiving services pursuant to a Medicaid home and community-based services waiver that is employed at least six months and worked at least 200 hours for the employer during the taxable year.
An employer is eligible for a $1,000 nonrefundable credit for providing any of the following services to an individual pursuant to a Medicaid home and community-based services waiver:

Prevocational;
Supported employment - individual;
Small group vocational support; or
Supported employment - follow along.

Refundable Credit for Direct Support Professionals

An individual is eligible to receive a $500 refundable credit if during the taxable year the individual worked for at least six months and 500 hours as a direct support professional. To claim the credit, the direct support professional must attach the tax credit certification received from DOR to their tax return.

Medical Debt Relief Act (LB 937 –Sections 43 through 49 and 75, July 19, 2024)

This Act establishes a medical debt relief program for Nebraska residents with low household income unable to pay their medical debt. The program is administered through the Nebraska State Treasurer (STO). The STO will contract with a medical debt relief coordinator to negotiate for and elect to buy dischargeable medical debt from health care providers for accounts described in the Act.

Contributions made under this Act to the STO qualify for a decreasing adjustment to the individual’s federal adjusted gross income (AGI), or the corporation or fiduciary’s federal taxable income to the extent a deduction is not taken on the federal return. For the individual who had medical debt discharged under the program, the Act provides a decreasing adjustment from federal AGI for the interest and principal balance of the discharged medical debt, to the extent included in the federal AGI.

Caregiver Tax Credit Act (LB 937 – Sections 56 through 59, Operative for Taxable Years Beginning on or After January 1, 2025)

The Act establishes a nonrefundable tax credit for family caregivers who provide care and support to an eligible family member for tax years beginning on or after January 1, 2025, and requires an application with DOR.

Family caregivers are individuals who provide care and support to an eligible family member and personally incur uncompensated expenses directly related to caring for an eligible family member. In addition, family caregivers have federal adjusted gross income of less than $100,000 for married, filing jointly returns or $50,000 for all other returns. Eligible family members are a dependent, spouse, parent, or other relation by blood or marriage of the family caregiver who live in a private residence and require assistance with at least two activities of daily living as certified by a licensed health care provider. Family members living in an assisted-living center, nursing facility, or residential care home are not eligible.

The tax credit amounts to 50% of eligible expenditures incurred by family caregivers during the taxable year with a maximum credit of $2,000, or $3,000 if the family member is a veteran or is diagnosed with dementia. The eligible expenditure must be directly related to assisting the family caregiver in providing care to an eligible family member. Eligible expenditures do not include general household maintenance activities such as painting, plumbing, electrical repairs, or exterior maintenance. If two or more family caregivers claim the credit for the same family member, the maximum credit is allocated equally between caregivers. Any unused credit cannot be carried forward.

Family caregivers must apply for the tax credit with DOR and include documentation of the eligible expenditures. If approved, DOR will certify the tax credits. DOR will consider applications in the order received based on the following annual limitations for the State fiscal years:

July 1, 2025 to June 30, 2026 $1,500,000
July 1, 2026 to June 30, 2027 $1,500,000
State fiscal years after $2,500,000

Reverse Osmosis System Tax Credit Act (LB 937 – Sections 60 through 63, July 19, 2024)

This Act establishes a one-time refundable income tax credit for the installation of a reverse osmosis system at a primary residence of a taxpayer. The credit equals 50% of the cost incurred by the taxpayer for installing the reverse osmosis system during the tax year, up to a maximum credit of $1,000.

Beginning with the 2024 tax year, individual income taxpayers may claim a credit for the cost of installing a reverse osmosis water filtration system if the test results for the drinking water are above the following:

Ten parts per million for nitrate nitrogen;
Four parts per trillion for perfluorooctanoic acid or perfluorooctanesulfonic acid;
Thirty micrograms per liter or 30 parts per billion for uranium; or
One on the Hazard Index for perfluorononanoic acid, perfluorohexanesulfonic acid, hexafluoropropylene oxide dimer acid and its ammonium salt, or perfluorobutanesulfonic acid.

The tax credit is limited to one taxpayer per residence. Taxpayers subject to the income tax imposed by the Nebraska Revenue Act of 1967 may submit an application with the test results to DOR. DOR will review the application and notify the taxpayer of the approved tax credit amount. Applications for the tax credit will be processed in the order received based on the following annual limitations in the State fiscal years:

July 1, 2024 to June 30, 2025 $ 500,000
July 1, 2025 to June 30, 2026 $ 500,000
July 1, 2026 to June 30, 2027 $ 500,000
State fiscal years after $1,000,000

Funding for the nonrefundable income tax credit to grocery store retailers, restaurants, and agricultural producers for food bank, food pantry, or food rescue donations (LB 937 - Section 79, Operative July 19, 2024)

For taxable years beginning on or after January 1, 2025, DOR may approve up to $500,000 of tax credits beginning with State fiscal year 2025-26 and each State fiscal year after for applications filed by grocery store retailers, restaurants, and agricultural producers for food donations made to food banks, food pantries, or food rescues.

Relocation Incentive Act (LB 1023 – Sections 1 through 6, Operative for Taxable Years Beginning on or After January 1, 2025)

Employer Credit

An employer that pays relocation expenses for a qualified employee may receive a refundable credit. A qualified employee is an individual who moves to Nebraska for the purpose of accepting a position of employment. The credit is equal to 50% of the relocation expenses paid during the tax year and is limited to $5,000 for each qualified employee. The refundable credit may be used to offset income taxes, franchise taxes imposed under Neb. Rev. Stat. §§ 77-3801 to 77-3807, and premium taxes, including retaliatory taxes under Neb. Rev. Stat. §§ 44-150, 77-908, or 81-523.
The employer must file an application with DOR requesting credits provided under the Nebraska Relocation Incentive Act (NRIA). DOR will approve the NRIA credits requested if the:

Employer files a complete application;
Employee is a qualified employee;
Employee’s annual salary is from $70,000 to $250,000 (2025 tax year);
Employer pays relocation expenses for a qualified employee;
Credit requested for each qualified employee does not exceed $5,000; and
Calendar-year credit limitation of $5 million has not been reached.

For tax years beginning on or after January 1, 2026, the annual salary thresholds will be adjusted each tax year by the same percentage used to adjust the individual income tax brackets.

NRIA credits may be recaptured from the employer if the qualified employee moves out of Nebraska within two years after the employer claimed the credit. The recaptured amount is an underpayment of tax and is due and payable on the tax return due immediately following the qualified employee's loss of residency.

Employee Nebraska Wage Exclusion

A qualified employee may make a one-time election to exclude his or her Nebraska source wages within two calendar years of becoming a Nebraska resident. A qualified employee is an individual who moves to Nebraska for the purpose of accepting a position of employment. The exclusion is available to qualified employees if the:

Election is made within two calendar years of becoming a Nebraska resident;
Wages were included in the employee’s federal adjusted gross income;
Annual wage income of the position accepted is from $70,000 to $250,000 (2025 tax year); and
Employee was not a resident of Nebraska in the year prior to the year in which residency is claimed for the purposes of the exclusion.

For tax years beginning on or after January 1, 2026, the annual wage thresholds will be adjusted each tax year by the same percentage used to adjust the individual income tax brackets.

Any tax reduction resulting from the exclusion may be recaptured if the qualified employee does not maintain residency in Nebraska for two full calendar years following the calendar year in which the exclusion was taken. The recaptured amount is an underpayment of tax and is due and payable on the tax return due immediately following the loss of residency.

Allow Full Expensing on Qualified Property and Qualified Improvement Property and an Adjustment for Certain Research or Experimental Expenditures (LB 1023 – Sections 10 and 11, Operative for Taxable Years Beginning on or After January 1, 2026)

Individuals, corporations, and fiduciaries may reduce federal adjusted gross income or federal taxable income by 60% of the cost of qualified property or qualified improvement property the year the asset is placed in service. The deduction is limited to the amount not deducted on the federal return. If the cost of the asset is not fully deducted on the federal return, the taxpayer may elect to depreciate the property over a five-year period.

Individuals, corporations, and fiduciaries may reduce federal adjusted gross income, or federal taxable income by the cost of research and experimental expenses in the year the expenses are incurred or paid. The reduction is limited to the amount not deducted on the federal return.

Federal Civil Service Retirement Exclusion (LB 1317 – Section 85, Operative July 19, 2024)

For taxable years beginning on or after January 1, 2024, LB 1317 limits the decreasing adjustment from federal AGI for amounts received as annuities under the Civil Service Retirement System that were earned from employment with the federal government, to the extent included in federal AGI. Under LB 1317, the decreasing adjustment does not apply to annuities received under the Federal Employees Retirement System.

Gain or Loss on the Sale or Exchange of Bullion (LB 1317 – Section 85, Operative for Taxable Years Beginning on or After January 1, 2025)

Individuals, corporations, and fiduciaries must add to federal adjusted gross income or federal taxable income any net capital loss from the sale or exchange of gold or silver bullion to the extent included in federal adjusted gross income.

The above adjustments do not apply to a taxable distribution of a gain or loss on the sale of bullion from a retirement plan account.

Changes to the Income Taxation of Nonresident Individuals Earning Compensation from a Business, Trade or Profession (LB 1023 – Section 13, Operative for Taxable Years Beginning on or After January 1, 2025)

For taxable years beginning on or after January 1, 2025, compensation paid to a nonresident by a business, trade, or profession is Nebraska sourced income of the nonresident if:

The nonresident performs services in Nebraska for more than seven days during the taxable year for which the compensation is paid; and
The nonresident is paid compensation for performing services outside Nebraska that are directly related to a business, trade, or profession carried on within Nebraska for the nonresident’s convenience, and except for the nonresident’s convenience, the services could have been performed within Nebraska.

Only the compensation paid for services performed within Nebraska constitutes Nebraska sourced income of the nonresident under this provision.

For taxable years beginning on or after January 1, 2025, any compensation paid to a nonresident employee by a business, trade, or profession is not Nebraska sourced income if all of the following conditions are met:

The wages are paid to the nonresident employee while present in Nebraska for a conference or training;
The nonresident employee is present and earning wages in Nebraska for seven days or less during the taxable year;
The nonresident employee earned wages for work performed in more than one state during the taxable year; and
The total wages earned while in Nebraska is $5,000 or less during the taxable year.

For taxable years beginning on or after January 1, 2025, Nebraska sourced income does not include compensation paid to nonresident board of directors or nonresidents holding similar positions on the governing body of a business, if the compensation relates to the activities of the board or governing body that take place in Nebraska.

Changes to Interest and Penalties Imposed for an Employer’s Failure to Withhold (LB 1023 – Section 13, Operative for Taxable Years Beginning on or After January 1, 2025)

For taxable years beginning on or after January 1, 2025, no penalty or interest will apply to an employer for failing to deduct and withhold income taxes for employees if the employer meets either condition:

The employer maintains a time and attendance system specifically designed to allocate employee wages for income tax purposes among all taxing jurisdictions in which an employee works for such employer and the employer did not withhold Nebraska income taxes in reliance on data from that system; or
The employer does not maintain a time and attendance system, as described above, and the employer relied on:
1. Its own records of the employee’s locations, as maintained in the regular course of business;
2. The employee’s reasonable determination of the time the employee expects to work in Nebraska, provided the employer had no actual knowledge of fraud on the part of the employee, and the employer and employee did not conspire to evade tax in determining the location;
3. Travel records;
4. Travel expense reimbursement records; or
5. A written statement from the individual of the number of days spent performing services in Nebraska during the taxable year.

Provide for Sales and Use Tax Exemption for Purchases by Certain Nonprofit Organizations (LB 937 – Section 70, Operative October 1, 2024)

A new exemption will be granted to any nonprofit organization for purchases of property that will be transferred to any of the organizations listed in Neb. Rev. Stat. § 77- 2704.12(1)(a) through (i), provided the nonprofit organization (1) acquires property that will be transferred, or (2) enters into a contract of construction, improvement, or repair upon property annexed to real estate if that property will be transferred. The exemption is granted until the property is transferred or the contract is completed.

Exemption for Diapers (LB 937 – Section 71, Operative July 1, 2027)

A new sales and use tax exemption is created on the sale, storage, use, or other consumption of diapers. Diapers means absorbent garments worn by humans who are incapable of or have difficulty controlling their bladder or bowel movements.

Changes to the Exemption on Currency and Bullion (LB 1317 – Section 83, Operative January 1, 2025)

The sales and use tax exemption for sales of bullion was expanded by adding to the definition of bullion coins, notes, leaf, foil, and film. The definition was also changed to include bullion for which the value depends primarily on its content and not the form.

Under prior law the definition of bullion included bullion for which the value of the metal depends on its content and not the form.

Changes to the Nebraska Advantage Act (LB 1088 – Operative July 19, 2024)

Under LB 1088, Tier 6 projects submitted and approved by the Tax Commissioner on or after December 1, 2020, may have two additional years to meet the required levels of employment and investment. Taxpayers must make a one-time election for this two-year extension.

Changes to the Nebraska Biodiesel Tax Credit Act and the E-15 Access Standard Act

(LB 1095 and LB 937 – Sections 81 and 82, Operative July 19, 2024)

Biodiesel Tax Credit Act

LB 1095 clarifies that the tax credit allowed under the Act is calculated only on the biodiesel portion of any product sold by the taxpayer that is a blend of biodiesel and diesel or other fuel. The Nebraska Department of Revenue (DOR) may approve up to $1 million in tax credits in State fiscal year 2024-25 and $1.5 million in any State fiscal year thereafter. The Act is extended one year to December 31, 2029, under LB 937.

E-15 Access Standard Act

LB 1095 changes the definition of motor fuel to mean all products and fuel commonly or commercially known as gasoline, including ethanol and various ethanol and gasoline blends. The definition of motor fuel storage and dispensing infrastructure is amended to include, but not be limited to, motor fuel storage tanks, motor fuel pumps, and motor fuel dispensers. In addition, the average annual gallonage of a small retail motor fuel site is amended to be based on the most recent three-year period. Previous law provided the three-year period as the period from January 1, 2021 to December 31, 2023.

Changes to the Sports Arena Facility Financing Act (LB 1197 – Operative July 19, 2024) and (LB 1317 – Sections 51 through 54, Operative July 19, 2024)

LB 1197

This Act allows a city or village and a nonprofit corporation to jointly apply for Nebraska Sports Arena Facilities Financing assistance, provided the project will be owned by one or both of the co-applicants as a sports complex economic development project.

Any approval from DOR is conditional upon voter-approval of a ballot question. The ballot question must briefly set out the terms of the proposed sports complex and must state the project will be funded with the Act. Specific language for the ballot question is provided in the Act. If the ballot question is approved by the voters, the city or village will implement the sports complex economic development project. A separate fund must be established by the city or village for the exclusive purpose of an approved sports complex economic development project. The funds must be used in a certain order provided in the Act. Any amount received and held for the project that is not committed or expended within five years may be transferred to the general fund of the city or village after a public hearing. If the funds are to be transferred, there must be 30 days written notice to the nonprofit corporation co-applicant delivered to its last known registered address. The sports complex economic development project will be separate and apart from any other economic development program of the city or village.

The amount appropriated from the Sports Facility Support Fund for an eligible sports arena facility that is a sports complex located in a second class city or village is no more than 25% of state sales tax revenue collected by retailers doing business at the eligible sports arena facility, state sales tax revenue collected on primary and secondary box office sales of admissions to such facilities, and new state sales tax revenue collected by nearby retailers. The funding for a sports complex located in a second class city or village will not be available after five years or when the state assistance reaches $100 million. The Act defines a sports complex for second class cities and villages as two separate venues. The program area for second class cities and villages is now the corporate limits of the city or village in which the facility is located.

If the state assistance will be used to provide funding for the promotion of sporting events, the documentation included with the application must contain a detailed description of the programs and how the programs will be in furtherance of the applicant’s public use or public purpose. The funding for promotion of sporting events is limited to ten years.

LB 1317

Covered property is now included in the Sports Arena Facility Financing Assistance Act. Covered property means any real property and any project previously approved under the Sports Arena Facility Financing Assistance Act or Convention Center Facility Financing Assistance Act.

A large public stadium that initial occupancy occurs on or after March 1, 2025, may apply. A large public stadium means an open-air facility located in a city of the metropolitan class that (a) is publicly-owned or used for governmental purposes; (b) primarily includes an outdoor field, and may include some indoor areas; (c) is primarily used for competitive sports; and (d) has between 5,500 and 7,500 permanent seats, with a capacity not to exceed 10,000 seats. Up to 100% of the final cost of the project for a large public stadium may be funded by state assistance. State assistance for a large public stadium ends after 20 years or when it reaches $25 million. The amount of approved state assistance for any year cannot exceed $1.25 million. No state assistance will be paid until after July 1, 2027.

Change the Community Development Assistance Act (CDAA) to the Creating High Impact Economic Futures (CHIEF) Act (LB 1344 – Sections 1 through 11 and 15, Operative January 1, 2025)

LB 1344 established the Creating High Impact Economic Futures (CHIEF) Act, which replaces the Community Development Assistance Act (CDAA). The CHIEF Act allows a nonrefundable tax credit for contributions to a certified community betterment program or project, as certified and administered by the Department of Economic Development.

Taxpayers contributing to programs or projects certified for tax credit status during a tax year are eligible for a credit equal to 50% of the total contributions made during the tax year, except individual taxpayers are eligible for a credit equal to 100%. Unused credits may be carried forward for five years and may not be carried back.

The credits are limited to:

$300,000 per congressional district, for a total of $900,000 per year, for calendar years 2025 and 2026;
$1 million per congressional district, for a total of $3 million per year, for calendar year 2027 and subsequent years; and
$150,000 per program or project in the first and third congressional districts per year.

Good Life District Legislation (LB 1344 – Sections 12 through 14, Operative July 19, 2024) and (LB 1317 – Sections 1 through 23, Operative July 19, 2024, and Section 81,
Operative July 1, 2024)

The Good Life District Economic Development Act

LB 1317 creates the Good Life District Economic Development Act. It provides that a city or village that has an established Good Life District (GLD) under the Good Life Transformational Projects Act may by majority vote of the registered voters of the city or village establish a good life district economic development program and provide authorization to appropriate certain local sources of revenue collected within the district. The economic development program may remain in effect for up to 30 years.

The city or village governing board may authorize an additional local option sales and use tax of up to 2.75% upon sales within the GLD. The city or village governing board is authorized to establish a general business occupation tax upon businesses within the GLD. The city or village governing board is authorized to issue bonds to carry out the purposes of the Good Life District Economic Development Act.

The city or village will establish a GLD economic development fund where proceeds from the additional local option sales and use tax, occupation tax, and sale of bonds will be deposited. Distributions from the fund may be made to a qualified business for the payment or reimbursement of eligible costs. The governing body may appropriate funds from the GLD economic development fund for eligible costs of the GLD economic development program and paying principal of and interest on bonds. The city or a village will provide for an annual outside independent audit of each GLD economic development program.

The city or village may enter into contracts and agreements with qualifying businesses related to assistance under the GLD economic development program provided the city or village enters into an exclusive agreement with an applicant approved by the Department of Economic Development.

Beginning July 1, 2024, the GLD state sales tax rate of 2.75% only applies to transactions that occur within a portion of the GLD that is also inside the corporate limits of a city or village.

Changes to the Good Life Transformational Projects Act

LB 1344 amends the Good Life Transformational Projects Act. It defines a qualified inland port district as a district created pursuant to the Municipal Inland Port Authority Act that is located within a city of the metropolitan class.

LB 1344 limits the number of GLDS that may be created to no more than five GLDs statewide, and no more than one GLD in any county with a population of 500,000 or more, excluding any GLD created within a qualified inland port district. In addition, it removes a project that received funds under the Shovel-Ready Capital Recovery and Investment Act or the Economic Recovery Act, or that includes any portion of a public or private university as a project eligible to be a GLD, unless it is located in a qualified inland port district.

For purposes of determining if a project is eligible to be a GLD, it excludes students from another state who attend a Nebraska public or private university as out-of-state residents. LB 1344 adds villages or sanitary and improvement districts within a county with a population less than 100,000 as an eligible GLD project where the applicant demonstrates the total new development costs will be over $100 million.

Cast and Crew Nebraska Act (LB 937 – Sections 1 through 13, July 19, 2024)

LB 937 creates the Cast and Crew Nebraska Act (CCNA). The administration of the CCNA is within the Nebraska Department of Economic Development (DED).

Starting with taxable years beginning on or after January 1, 2025, a production company will be eligible to receive refundable income tax credits equal to 20% of the qualifying expenditures incurred by the production company directly attributable to a qualified production activity. Qualified production activity means a full-length film, made-for- television movie, television series of at least five episodes, or streaming television series. The tax credit is eligible for increases as defined in the CCNA.

The total amount of tax credits under the CCNA is capped at $500,000 in State fiscal year 2025-2026 and $1 million in any State fiscal year thereafter. The maximum allowable tax credit claimed in any single taxable year for “any qualified production activity that is a full- length film, made-for-television movie, television series of at least five episodes, or streaming television series” is limited to $500,000 in State fiscal year 2025-2026 and $1 million in any State fiscal year thereafter.

A production company must file an application with the DED in order for a production activity to qualify as a qualified production activity. Applications are considered in the order they are received. If DED approves the application, it notifies the production company and issues a screen credit that can be used to meet the requirement for the tax credit increase.

To receive tax credits under the CCNA the production company must submit an application to DED after completing the qualified production activity. Applications are considered in the order they are received. If DED determines the application is complete and the production company qualifies for the tax credits it will approve the application, notify the production company of the approval, and conduct an audit of each qualified production activity. Once the audit has been completed DED will determine the value of the tax credit and issue a tax credit certification. A production company that receives tax credits under the CCNA is not eligible for a grant under Neb. Rev. Stat. § 81-1220(3).

A production company claims the tax credit by attaching the tax credit certification to its tax return for the taxable year in which the certificate was issued, or in the three taxable years immediately following the taxable year in which it was issued. The tax credits can be transferred to any Nebraska taxpayer at any time during the taxable year in which the certificate was issued, or in the three taxable years immediately following the year of issuance. The transferee must pay the transferor at least 85% of the value of the transferred credits in order to acquire the credits.

Nebraska Shortline Rail Modernization Act (LB 937 – Sections 14 through 23, July 19, 2024)

For tax years beginning on or after January 1, 2025, the Nebraska Shortline Rail Modernization Act provides a nonrefundable tax credit against income tax, franchise tax imposed by Neb. Rev. Stat. §§ 77-3801 to 77-3807, and premiums taxes imposed by Neb. Rev. Stat. §§ 77-907 to 77-918 for qualified maintenance expenditures incurred by a Class III railroad. The credit is 50% of the qualified shortline railroad maintenance expenditures incurred during the tax year by the Class III railroad. Qualified shortline railroad maintenance expenditures do not include expenditures used to generate a federal tax credit or expenditures funded by a federal grant. The amount of the credit cannot exceed an amount equal to $1,500 multiplied by the number of miles of railroad track owned or leased in the state by the applicant at the end of the taxable year. The total amount of tax credits allowed is limited to $500,000 in State fiscal year 2025-26 and $1 million for each State fiscal year after.

To receive the tax credit, the Class III railroad must submit an application to the DOR after incurring the relevant qualified shortline railroad maintenance expenditures. The application must be submitted no later than May 1 of the calendar year immediately following the calendar year in which the expenditures were incurred. DOR will issue a tax credit certificate to the Class III railroad with an approved application. The Class III railroad will claim the credit by attaching the certification to the tax return. Any unused credit is carried forward and can be applied against the tax liability for the next five taxable years immediately following the taxable year in which the credit was first allowed. The tax credits are transferable to another taxpayer by written agreement. No new applications for tax credits can be filed after December 31, 2033.

Sustainable Aviation Fuel Tax Credit (LB 937 – Sections 50 to 55, Operative for Taxable Years Beginning on or After January 1, 2027)

For tax years beginning on or after January 1, 2027, producers of sustainable aviation fuel may receive a nonrefundable credit for use against the income tax imposed by the Nebraska Revenue Act of 1967, the premiums tax imposed under Neb. Rev. Stat. §§ 77- 907 to 77-918, or the franchise tax imposed under Neb. Rev. Stat. §§ 77-3801 to 77-3807.

The credit equals the number of gallons of sustainable aviation fuel in all sold or used qualified mixtures multiplied by the sum of $0.75 plus the applicable supplementary amount. The supplementary amount is an amount equal to $0.01 for each percentage point by which a lifecycle greenhouse gas emissions reduction percentage of the sustainable aviation fuel exceeds 50%, not to exceed $0.50. The lifecycle greenhouse gas emissions reduction percentage is the percentage reduction achieved by sustainable aviation fuel as compared to petroleum-based jet fuel, as defined by federal law (meaning: the most recent Carbon Offsetting and Reduction Scheme for International Aviation which has been adopted by the International Civil Aviation Organization with the agreement of the United States; or any similar methodology which satisfies the criteria under 42 U.S.C. 7545(o)(1)(H), as such section existed on January 1, 2024).

The producer must apply for the credit with DOR, and DOR may approve tax credits each State fiscal year until the total credits approved reaches $500,000. The credit can only be claimed by a producer for a total of five taxable years. Any credit allowable to a partnership, LLC, S corporation, or estate or trust may be distributed to the partners, members, shareholder, or beneficiaries in the same manner as income is distributed.

To qualify for the credit, the producer must register with DOR and provide certification from an unrelated party demonstrating compliance with any general requirements, supply chain traceability requirements, and information transmission requirements established under federal law (as described in the above) and any other information DOR may require.

This Act terminates on January 1, 2035.

Notices by the Tax Commissioner (LB 146, Operative July 19, 2024)

With written authorization by the taxpayer, the Tax Commissioner may send any notice required to be given under the Nebraska Revenue Act of 1967 by electronic mail or other secure electronic means. LB 146 removes the return receipt requested requirement for notices sent by certified mail.

Tobacco Products Tax Act (LB 1204 – Sections 10 through 18 and 24 through 35, Operative July 19, 2024)

Delivery sales of electronic nicotine delivery systems (ENDS) are prohibited. A wholesaler or retailer cannot purchase or receive for purposes of resale, any cigars, tobacco, ENDS, cigarettes, or cigarette material if the manufacturer does not hold a license or certification required by the Act. A tobacco product manufacturer cannot sell or deliver any cigars, tobacco, ENDS, cigarettes, or cigarette material to any wholesaler or retailer who does not have a valid tobacco license issued by the city or county clerk. The city or county clerk that grants a tobacco license must notify the Nebraska Department of Revenue (DOR) and provide all applicable application material to DOR.

A wholesaler or retailer cannot purchase or receive ENDS if the manufacturer does not have a certification required by the Act. A wholesaler or retailer licensed under the Act must ensure the e-liquid container for ENDS sold:

Meets packaging standards of the federal Child Nicotine Poisoning Prevention Act; and
Has a label that meets the nicotine addictiveness warning.

A licensee under the Act cannot market, advertise, sell or cause to be sold ENDS, if the systems containers, packaging, or advertising:

Depicts a cartoon-like character aimed primarily at entertaining minors;
Mimics trademarks or trade dress of products that have been marketed to minors;
Includes a symbol primarily used to market products to minors;
Includes a celebrity; or
Is designed to disguise it is an ENDS.

ENDS manufacturers must submit a certification under the Act with DOR. The certification requires a $75 fee for each type of ENDS sold. The application will include:

The manufacturer's name and address;
The location to be licensed;
PACT Act registration form, if applicable;
An attestation to comply with the PACT Act, the laws of Nebraska, and the laws of the licensed location;
If located outside the U.S., identification of its importers and that the importers accept joint and several liability with the manufacturer for all liability imposed under the Act;
The manufacturer complies with the requirements of the U.S. Customs and Border Protection agency;
A list of each ENDS to be sold; and
Any other information required by DOR when administering the Act.

Changes to Motor Fuel Tax Provisions (LB 937 – Sections 64 and 65, Operative August 1, 2024)

Starting August 1, 2024, the excise tax paid by producers of ethanol is expanded to include sales of gasoline and any other gasoline component produced from biomass feedstock purchased for use as a denaturant by the producer at an ethanol facility.
A new excise tax is established on two percent of agricultural ethyl alcohol sold that is unfit for beverage purposes and does not meet the American Society for Testing and Materials D4806 standards.

Financial Institution Data Match Act (LB 1317 – Sections 24 through 31, Operative July 19, 2024)

The Financial Institution Data Match Act (FIDM Act) authorizes DOR to operate a financial institution data match system for the collection of any delinquent tax, fee, or other type of repayment under any program administered by the Tax Commissioner.

Under the FIDM Act, an account includes a demand deposit account, checking or negotiable withdrawal order account, savings account, time deposit account, or money- market mutual fund account. Financial institutions are defined as every federal or state commercial or savings bank, including savings and loan associations and cooperative banks, federal or state chartered credit unions, benefit associations, insurance companies, safe deposit companies, any money-market mutual fund that meets the requirements of § 851(a) of the Internal Revenue Code and 17 C.F.R. 270.2a-7, any broker, brokerage firm, trust company, or unit investment trust, or any other similar entity doing business or authorized to do business in the State.

DOR is authorized to contract with one or more vendors to develop the data match system and perform the match. Within 30 days after the end of each calendar quarter, a financial institution will receive a list of tax debtors including name, social security number or federal employer identification number. The financial institution will compare the list to its records of accounts held in one or more persons' names which are open accounts or accounts that were closed within the preceding calendar quarter. Any matches will be provided within five working days of the match.

Gambling Winnings Setoff for Outstanding Debt Act (LB 1317 – Sections 33 through 49, Operative July 19, 2024)

Casino winnings, parimutuel winnings, sports wagering winnings, and cash device winnings above certain amounts will be setoff and used for non-payment of child or spousal support and then outstanding state tax liability under any tax program administered by the Tax Commissioner, Department of Labor, or Department of Motor Vehicles after the child support set off.

DOR and the Nebraska Department of Health and Human Services (DHHS) will develop and implement a secure, electronic collection system to carry out the purposes of the Act. DOR will designate an implementation date for use of the collection system on or after January 1, 2025, but by January 1, 2026, for the casino setoff; and by January 1, 2027, for the cash device setoff. There will be a minimum of 90-day notice posted on DOR’s website before the implementation goes into effect.

Nebraska Lottery setoffs are updated to place first priority to non-payment of child or spousal support and then outstanding state tax liability.

Excise Tax Imposed on Electric Energy Used to Charge Motor Vehicles and Sales and Use Tax Exemption on Electric Energy Used to Charge Motor Vehicles (LB 1317 – Sections 61 through 69 and 84, Operative January 1, 2028)

Beginning January 1, 2028, an excise tax of three cents per kilowatt hour will apply on the electric energy used to charge the battery of a motor vehicle at a commercial electric vehicle charging station. Sales and use taxes will not be imposed on the electric energy used to charge the battery of a motor vehicle at a commercial electric vehicle charging station once the excise tax is in place.

Changes to Inheritance Tax Reporting (LB 1317 – Section 79, Operative July 1, 2024)

Inheritance tax reporting requirements have been updated for reports submitted by petitioners and counties before and after July 1, 2024.

Changes to the First Responder Recruitment and Retention Act (LB 1317 – Sections 97 through 103, July 19, 2024)

LB 1317 expands the eligibility for tuition waivers under the Act by removing the definition of law enforcement agency from the Act and using the definition of law enforcement officer in Neb. Rev. Stat. § 81-1401. It also expanded the meaning of professional firefighter to include a member of a paid fire department within Nebraska that provides fire protection to state military installations as an entity qualifying as a fire department.

LB 1317 adds a definition of legal dependent which has the same meaning as used in the Free Application for Federal Student Aid (FAFSA) and adds an eligibility requirement to complete the FAFSA. The requirement that a professional firefighter be pursuing a degree in science or medicine has been removed.

LB 1317 adds a provision for the eligible legal dependent to qualify for the tuition waiver directly with the educational institution in the event of death in the line of duty of the officer or firefighter.

On or before December 31 each year, the educational institutions are required to provide a list of legal dependents who received tuition waivers during the year to DOR. DOR must maintain a record of the legal dependents who received tuition waivers under the Act. DOR also must provide an annual report to educational institutions that awarded the tuition waivers of any recipients that failed to file a tax return.

Changes to the Charitable Gaming Division and the Mechanical Amusement Device Tax Act (LB 685 – Operative July 19, 2024)

LB 685 amended the Act as follows. Beginning on and after July 1, 2025, a tax of 5% is imposed on the net operating revenue of all cash devices operating in Nebraska. Cash devices operated by a fraternal benefit society or veterans organization are exempt. Net operating revenue means the dollar amount collected by a distributor or operator of any cash device less the total of cash awards paid out to players by the cash device. The Tax Commissioner will remit the net operating revenue taxes collected to the State Treasurer for credit as follows:

20% to the Charitable Gaming Operations Fund for enforcement of the Act and maintenance of the central server;
2.5% to the Compulsive Gamblers Assistance Fund;
2.5% to the General Fund;
10% to the Nebraska Tourism Commission Promotional Cash Fund;
40% to the Property Tax Credit Cash Fund; and
25% to the county treasurer of the county in which the cash device is located to be distributed as follows:

If the cash device is located completely within an unincorporated area of a county, all 25% is distributed to the county in which the cash device is located; or
If the cash device is located within the limits of a city or village in such county, half of the 25% is distributed to such county and half of the 25% is distributed to the city or village in which such cash device is located.

The taxes collected by the Nebraska Department of Revenue (DOR) in relation to net operating revenue must be used by the Charitable Gaming Division for enforcement of the Act and to maintain the central server. Political subdivisions are prohibited from imposing a tax on mechanical amusement devices in addition to the taxes imposed by the Act.

DOR will implement a central server that records the following data: sales, transactions, prizes won and paid, duration of play or transactions, hours of operation, and any other requirements established by DOR adopted through regulation. This server must be operational within one year of July 19, 2024.

Distributors must pay income, occupation, and net operating taxes quarterly to be filed January 1, April 1, June 1, and October 1 of each calendar year. Distributors who are outside of Nebraska will pay income taxes on all income earned in Nebraska. Operators are required to pay income taxes on income generated by such cash devices quarterly to be filed January 1, April 1, June 1, and October 1 of each calendar year. Operators must pay occupation tax and net operating tax quarterly on the same schedule unless the operator is subject to a revenue-sharing or other agreement with a distributor who pays the taxes on a quarterly basis as required by the Act. Distributors or operators will also provide IRS Forms 1099 to each winner of a prize as required.

Distributors, operators, or manufacturers seeking licensure are subject to additional requirements. DOR may deny an application for a distributor, operator, or manufacturer license for cause as defined by the Act. In addition, DOR may seek suspension or revocation of such license for violations of the Act. Beginning January 1, 2025, the fee for a distributor license is $100 per device up to a maximum of $5,000. There is no fee for an operator license. The license fee for a manufacturer is $5,000.

DOR is authorized to review documentation between distributors, manufacturers, and operators related to cash devices. DOR has authority to approve all cash device locations in Nebraska. No cash device can be moved from its approved location without prior approval by DOR. In addition, DOR will determine the retail establishment standards and will consider the factors in Neb. Rev. Stat. § 77-3006 when licensing a location to operate a cash device.
A retail establishment must generate at least 60% of its gross operating revenue from sources other than cash devices to place a cash device there. This requirement does not apply to a fraternal benefit society or a veterans organization. The maximum number of cash devices is the lesser of:

Four, unless the space requirements are met under the Act; or
Except for a fraternal benefit society or veterans organization, the number of cash devices it takes to generate 40% of the gross operating revenue of the retail establishment.

The minimum age to play a cash device is increased from 19 to 21 years old. The age of individuals requesting to play the cash device must be verified. In addition, no fee or gratuity can be charged to cash out winnings.

Change Provisions Relating to Lotteries and Raffles, the State Lottery Act, and Public Records (LB 1204 – Sections 1 through 8, and 37, Operative July 19, 2024)

The Nebraska Lottery and Raffle Act is amended to cover lotteries and raffles with gross proceeds greater than $15,000. The tax imposed on the gross proceeds of lotteries and raffles remains at a rate of 2% for licensed lotteries and raffles with proceeds greater than $15,000.
The Nebraska Small Lottery Act is amended to apply to lotteries and raffles with gross proceeds not greater than $15,000. In addition, any qualifying nonprofit organization may conduct one lottery per month that has gross proceeds not greater than $15,000 and may conduct one or more raffles per month if the total gross proceeds from such raffles do not exceed $15,000 during the month.

Lottery prize winners of $250,000 or more will remain anonymous, except upon written authorization by the winner.

LB 34 implements the Property Tax Growth Limitation Act and the School District Tax Relief Act (LB34– Operative August 20, 2024)

For fiscal years starting on or after July 1, 2025, the Property Tax Growth Limitation Act places limitations on how much cities, villages, and counties can increase their property tax request authority from year to year. The Act limits increases in property tax request authority for these political subdivisions to the amount of property taxes levied in the prior fiscal year decreased by any property tax request authority limitation exceptions utilized for the amount of property taxes budgeted for approved bonds and declared emergencies in the prior year, increased by political subdivision’s growth percentages and the greater of zero or the inflation percentage.

A political subdivision may increase its property tax request authority over the stated increase limitation by the amount of property taxes budgeted for 1) approved bonds, 2) declared emergencies in the prior year, 3) services related to threats to public safety, 4) public safety services, 5) county attorneys and public defenders. This limitation may also be exceeded by the amount of a political subdivision’s unused property tax request authority and by increases in property tax request authority which are approved by voters.

LB 34 establishes the School District Property Tax Relief Act and creates the School District Property Tax Relief Credit Fund.

The Act applies to fiscal year 2024-25 and each year after. The total amount of relief granted for each fiscal year under the Act will be as follows:

Fiscal year 2024-25: $750 million
Fiscal year 2025-26: $780 million
Fiscal year 2026-27: $808 million
Fiscal year 2027-28: $838 million
Fiscal year 2028-29: $870 million
Fiscal year 2029-30: $902 million
Fiscal year 2030-31 and each tax year after: The total amount of relief from the prior year increased by 3 percent.

The relief will be in the form of property tax credits which appear on property tax statements. Property tax credits granted will be credited against the amount of property taxes owed to a school district or multiple-district school system, excluding property taxes levied by a school district for bonds or as a result of a property tax levy override
approved by voters.

To determine the amount of property tax credit per parcel, the county treasurer will multiply the amounts disbursed to the county by the ratio of the school district taxes levied in the prior year on the parcel to the school district taxes levied in the prior year on all real property in the county. The amount determined shall be the property tax credit for the parcel.

To determine the amount of property tax disbursed to each county, the Property Tax Administrator will multiply the amount of credits available for each fiscal year by the ratio of the school district taxes levied in the prior year on all real property in the county to the school district taxes levied in the prior year on all real property in the state. The amount determined shall be the property tax credit amount for the county and such county amounts will be determined by the Property Tax Administrator starting September 15, 2024, and by September 15 of each year after.

If the real property owner qualifies for a homestead exemption, the owner will also be qualified for this property tax credit to the extent of any remaining liability after calculation of the homestead exemption. If the property tax credit results in a property tax liability on the homestead that is less than zero, the amount of the credit which cannot be used by the taxpayer will be turned to the Property Tax Administrator by July 1 of the year the amount disbursed to the county was disbursed. The Property Tax Administrator will immediately credit any funds returned to the School District Property Tax Relief Credit Fund.

If actual General Fund net receipts for the most recently completed fiscal year exceed 103% of the actual General Fund net receipts for the previous fiscal year, the amount transferred to the cash reserve will be reduced by the excess amount and the excess amount will be transferred to the School District Property Tax Relief Credit Fund.

The bill makes changes to the Nebraska Property Tax Incentive Act by removing the definition of allowable growth percentage and sunsets the school district property tax credit after tax year 2023.

The bill removes limits on a transfer occurring regarding the Nebraska Transformational Project Fund where previously the total amount of refundable credits granted annually under the Nebraska Property Tax Incentive Act had to reach $375 million before such a transfer could take place.

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