Lawmakers approved a bill May 21 that cuts Nebraska’s top corporate income tax rate by approximately one-half of 1 percent over the next two years.
LB432, introduced by the Revenue Committee as a placeholder bill, contains amended provisions of LB680, introduced by Elkhorn Sen. Lou Ann Linehan, and provisions of several other bills heard by the committee this session.
Linehan’s proposal reduces the state’s top corporate income tax rate, which applies to income in excess of $100,000, from 7.81 percent to 7.5 percent for tax years beginning on or after Jan. 1, 2022, and before Jan. 1, 2023. The rate will fall to 7.25 percent for tax years beginning on or after Jan. 1, 2023.
The bill states the intent of the Legislature to further reduce the rate to 7 percent for tax years beginning on or after Jan. 1, 2024, and before Jan. 1, 2025, and to 6.84 percent for tax years beginning on or after that date.
The corporate income tax rate on the first $100,000 of income remains at 5.58 percent.
LB432 also includes provisions of LB597, introduced by Sen. Joni Albrecht of Thurston. They create a $2,000 refundable state income tax credit for the parent of a stillborn child if a fetal death certificate is filed and if the child had advanced to at least the 20th week of gestation and would have been a dependent of the individual claiming the credit.
Also included in the bill are provisions of LB299, introduced by Omaha Sen. Mike McDonnell, that allow any rural or suburban fire protection district, airport authority, city, village or nonprofit corporation to provide and maintain enhanced cancer benefits for paid and volunteer firefighters, the combined total of which cannot exceed $50,000 in the firefighter’s lifetime.
Under the provisions of LB564, also introduced by McDonnell, Nebraska Education Savings Plan trust accounts may be used to pay for the cost of certain apprenticeship programs.
Finally, the provisions of LB254, introduced by Sen. Matt Williams of Gothenburg, extend the sunset date for the Beginning Farmer Tax Credit Act from Dec. 31, 2022, to Dec. 31, 2025.
Omaha Sen. Machaela Cavanaugh filed a motion to return LB432 to select file in order to adopt an amendment that would strike its enacting clause. The motion failed on a vote of 2-40.
Cavanaugh said a corporate tax cut should not take precedence over other priorities, such as providing services for vulnerable Nebraskans.
After two hours of debate on final reading, Linehan filed a motion to invoke cloture, which ceases debate and forces a vote on the bill and any pending amendments. It succeeded on a vote of 43-3. Thirty-three votes were needed.
LB432 passed on a vote of 42-1.