Revenue omnibus bill clears first round
Senators gave first-round approval April 29 to a package of revenue-related bills, including a proposal under which Nebraska educational savings plan trust accounts could be used to pay for private K-12 education.
The Revenue Committee introduced LB647 as a shell bill. A committee amendment would have replaced the measure with provisions of five other bills considered by the committee this session.
The amended provisions of LB242, introduced by Sen. Merv Riepe of Ralston, would update a measure passed during last year’s special session that limits increases in city and county property tax request authority. The cap goes into effect for fiscal years beginning on or after July 1, 2025.
Riepe said his proposal would make several technical or clarifying changes needed to make the law function as intended. Among other updates, the amendment would:
• modify the property tax request authority calculation to ensure that it accounts for a political subdivision’s growth;
• provide a one-time mechanism allowing cities and counties to carry forward unused restricted funds authority; and
• remove a revenue cap on local occupation taxes.
The amended provisions of LB401, introduced by Elkhorn Sen. R. Brad von Gillern, would clarify a provision allowing Nebraskans to pay their state income taxes through a passthrough entity such as an LLC.
Von Gillern said the change would ensure that taxpayers are able to claim credits for state and local taxes that they otherwise might not have claimed in recent years.
The proposal also would require notices of deficiency to include a written statement detailing the facts, circumstances and reasons the state tax commissioner used to determine that a taxpayer did not report the correct amount of tax on an income tax return.
Under the amended provisions of LB628, sponsored by Sen. Robert Dover of Norfolk, a taxpayer who encumbers their property with a perpetual recreational trail easement could apply to their county assessor for an annual property tax exemption equal to 10 cents per square foot of the property encumbered by the easement.
To qualify, the easement would have to be held by certain eligible entities, provide public access and connect to existing or planned trails or local attractions.
The provisions of LB709, introduced by Lincoln Sen. Eliot Bostar, would create a refundable state income tax credit equal to 10% of the federal adoption expenses tax credit allowed to a taxpayer in the same taxable year.
Under the amended provisions of LB131, sponsored by Sen. Tony Sorrentino of Elkhorn, Nebraska educational savings plan trust accounts could be used to pay for private elementary and secondary school tuition, not to exceed $10,000 per beneficiary per taxable year. Sorrentino said the bill would align Nebraska law with federal changes made in 2017.
Contributions to 529 accounts grow tax-deferred, and withdrawals are exempt from state and federal taxes as long as they are used for a beneficiary’s qualified education expenses, including tuition, room and board at an eligible postsecondary educational institution.
Individuals may claim a state income tax deduction equal to contributions they make to an account, up to $5,000 for those married filing separately and $10,000 for other filers.
Lincoln Sen. George Dungan made a successful motion to divide the question and consider the provisions of LB131 separately from the rest of the committee proposal.
Dungan opposed the amendment containing Sorrentino’s proposal, saying the proposed tax deduction indirectly would subsidize private schools with public dollars, which a majority of Nebraskans do not support.
Lawmakers voted 32-11 to adopt the amendment.
Sen. Dan Quick of Grand Island introduced an amendment, adopted 42-0, to include amended provisions of his LB566. Individuals currently may claim a nonrefundable $5,000 income tax credit if they purchase a primary residence located in an area that has been declared extremely blighted. The credit is available for tax years beginning before Jan. 1, 2026.
Quick’s amendment would extend the sunset date to Jan. 1, 2032.
After voting 42-0 to adopt the amendment containing the remainder of the committee proposal, senators advanced LB647 to select file on a vote of 39-0.
