Income tax deduction for employers of felons clears first round

Businesses that hire felons would receive a state income tax deduction under a bill advanced from general file March 3.

Under LB917, introduced by Omaha Sen. Justin Wayne, a company’s federal adjusted gross income or federal taxable income would be reduced by 65 percent of the wages paid to an individual who has been convicted of a felony.

The deduction would apply to wages paid during the first 12 months of the individual’s employment, and the total deduction per employee could not exceed $20,000.

Wayne said the proposal would encourage employers to hire individuals who recently were incarcerated, which would help reduce Nebraska’s recidivism rate.

The state Department of Revenue estimates that LB917 would reduce state general fund revenue by $2.6 million in fiscal year 2023-24 and $2.6 million in FY2024-25.

Senators voted 38-1 to advance the bill to select file.