Tax incentives pared back
Lawmakers gave final approval April 30 to a bill that rolls back various recently enacted tax incentives.
LB650, introduced by Elkhorn Sen. R. Brad von Gillern at the request of Gov. Jim Pillen, eliminates, scales back or postpones tax credits and exemptions to generate revenue intended to help senators balance the state budget.
The bill:
• decreases the annual limit on livestock modernization or expansion credits under the Nebraska Advantage Rural Development Act;
• decreases the annual limit on a credit for employers to help offset the relocation expenses of qualifying employees;
• decreases tax credits for qualified shortline railroad maintenance expenditures from $1 million to $500,000 per year;
• decreases film and television production credits from $1 million to $500,000 per year;
• decreases annual credits for biodiesel retailers from $1.5 million to $1 million beginning with fiscal year 2025-26;
• decreases annual credits for installation of reverse osmosis systems;
• decreases the amount that businesses are allowed to deduct for collecting and remitting state sales tax;
• eliminates a food donation tax credit;
• ends applications for incentives under the Urban Redevelopment Act;
• ends tax credits under the Creating High Impact Economic Futures Act after 2025; and
• pauses acceptance of program certification applications for renewable chemical production tax credits from 2026 through 2029.
LB650 also creates the Community Development Assistance Act. Under the program, individuals and businesses may apply for a tax credit for contributions they make to certain programs offered by community betterment organizations. Up to $350,000 in credits may be approved annually beginning with tax year 2026.
The state Department of Revenue estimates that the bill will increase state general fund revenue by $11.8 million in FY2025-26, $39.5 million in FY2026-27 and $46.8 million in FY2027-28.
As amended, LB650 includes provisions of five other bills considered by the Revenue Committee this session.
The provisions of LB270, sponsored by Sen. Victor Rountree of Bellevue, allow an individual certified by a municipality to review confidential sales and use tax information to notify the Auditor of Public Accounts of suspected irregularities or discrepancies.
The amended provisions of LB458, introduced by Lincoln Sen. Eliot Bostar, update notice and other requirements related to the tax sale certificate process.
The provisions of LB494, introduced by Sen. Myron Dorn of Adams, clarify current law requiring transfers to the School District Property Tax Relief Credit Fund and the Cash Reserve Fund based on state General Fund net receipts.
The provisions of LB495, sponsored by Blair Sen. Ben Hansen, remove Nebraska community colleges from the list of political subdivisions that must notify taxpayers via postcard and participate in a joint public hearing before increasing their property tax request by more than a certain percentage.
The provisions of LB547, introduced by Rountree, update the definitions of disabled veteran and blind veteran for purposes of state tax exemptions on motor vehicles and mobile homes.
LB650 passed on a vote of 40-7 and takes effect immediately.
