Income tax credit change approved for passthroughs

Lawmakers gave final approval April 29 to a bill that changes the way in which passthrough entities claim a refundable income tax credit under the Property Tax Incentive Act.

The act, passed last year, requires passthrough entities, trusts and estates to allocate the credit — which is based on school property taxes paid — in the same proportion that income is distributed to shareholders, partners, members or beneficiaries.

LB181, sponsored by Elkhorn Sen. Lou Ann Linehan, allows passthrough entities, trusts and estates to distribute the credit in the current manner for taxable years beginning or deemed to begin before Jan. 1, 2021.

For taxable years beginning or deemed to begin on or after that date, the credit will be claimed at the entity level.

The bill passed on a 46-0 vote and takes effect immediately.