Nebraskans may receive a tax credit for contributions to organizations that grant scholarships to students to attend private school under a measure passed by lawmakers May 24.
Elkhorn Sen. Lou Ann Linehan introduced LB753 at the request of Gov. Jim Pillen. The measure allows individuals, passthrough entities, estates, trusts and corporations to claim a nonrefundable income tax credit of up to 50 percent of their state income tax liability on contributions made to nonprofit organizations that grant scholarships to students to attend private school.
Contributions from individuals, passthrough entities and corporations are capped at $100,000, and contributions from estates or trusts are limited to $1 million.
Only Nebraska residents are eligible for the scholarships, which may be used to pay tuition and fees at a qualifying privately operated elementary or secondary school.
A scholarship granting organization must provide the state Department of Revenue with sufficient information to show that it will use a tiered system that prioritizes certain students.
The department may grant $25 million in credits in 2024, 2025 and 2026. After that, if at least 90 percent of the credits in any given year are claimed, the annual limit will increase by 25 percent. Annual increases may continue until the total credit amount reaches $100 million.
The department estimates that the full credit amount will be claimed in the first three years and that LB753 will reduce state general fund revenue by $31.3 million in FY2027-28.
After two hours of debate on final reading, Linehan filed a motion to invoke cloture, which ends debate and forces a vote on the bill and any pending amendments.
The motion succeeded on a vote of 33-11. Thirty-three votes were needed.
Senators then voted 33-11 to pass LB753.