{"id":31288,"date":"2022-01-28T13:16:33","date_gmt":"2022-01-28T19:16:33","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=31288"},"modified":"2022-01-28T13:16:33","modified_gmt":"2022-01-28T19:16:33","slug":"corporate-individual-income-tax-rate-cuts-proposed","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=31288","title":{"rendered":"Corporate, individual income tax rate cuts proposed"},"content":{"rendered":"

Nebraska\u2019s top corporate and individual income tax rates would fall to 5.84 percent by 2026 under proposals heard Jan. 27 by the Revenue Committee.

\"Sen.
Sen. Lou Ann Linehan<\/figcaption><\/figure><\/p>\n

LB938, sponsored by Elkhorn Sen. Lou Ann Linehan, would cut the state\u2019s top corporate income tax rate, which applies to income in excess of $100,000, in four steps, from the current 7.5 percent to 5.84 percent beginning in tax year 2026. <\/p>\n

The rate on the first $100,000 of taxable income will remain 5.58 percent. <\/p>\n

Linehan said the bill would accelerate the phased-in reduction in the top corporate rate approved by the Legislature last year in LB432. That proposal reduced the rate from 7.81 percent to 7.5 percent for tax year 2022. It will fall to 7.25 percent beginning in tax year 2023. <\/p>\n

The state Department of Revenue estimates that LB938 would reduce general fund revenue by $1.9 million in fiscal year 2022-23, $10.6 million in FY2023-24, $29.3 million in FY2024-25 and $53.5 million in FY2025-26. <\/p>\n

LB939, also introduced by Linehan, would cut Nebraska\u2019s top individual income tax rate from the current 6.84 percent to 5.84 percent beginning in tax year 2025.<\/p>\n

The rate applies to income of $29,000 and over for individuals and $58,000 and over for those who are married filing jointly. <\/p>\n

The department estimates that the bill would reduce general fund revenue by $61.7 million in fiscal year 2022-23 and $177 million in FY2023-24. By FY2026-27, the reduction would grow to $363 million. <\/p>\n

Linehan said the proposals would create rate parity for corporations and businesses formed as passthrough entities, whose owners pay taxes at the individual rate.<\/p>\n

They also would help Nebraska compete with neighboring states when trying to attract businesses and workers, she said, and generate economic activity by allowing taxpayers to keep more of their money. <\/p>\n

Bryan Slone testified in support of both bills on behalf of the Nebraska Chamber of Commerce and Industry, the Greater Omaha Chamber and the Lincoln Chamber of Commerce. <\/p>\n

He said cutting the state\u2019s corporate and individual income tax rates is \u201ccritical\u201d if the state is to compete for workers and corporations, especially technology companies, in a post-pandemic economy. <\/p>\n

\u201cNebraska has an incredible ability to be a top 10 growth state in the country if we get this workforce thing right,\u201d Slone said. \u201cWhat does lowering the income tax rate do in that context? I would say everything.\u201d<\/p>\n

Craig Beck testified in opposition to both bills on behalf of OpenSky Policy Institute. Nebraska already provides generous tax incentives to corporations, he said, and approximately 80 percent of the proposed cut in LB938 would go to taxpayers who do not live in Nebraska. <\/p>\n

Beck said LB939 would disproportionately benefit the wealthiest Nebraskans without creating the promised economic growth. Under Linehan\u2019s proposal, he said, the average tax cut for the 80 percent of Nebraskans who are paid less than $125,000 per year would be $63, compared to $8,900 for the highest 1 percent of earners. <\/p>\n

Nicole Fox of the Platte Institute gave neutral testimony on both bills. She said the Platte Institute would prefer to see both proposals included in an \u201caggressive,\u201d comprehensive plan to change the state\u2019s overall tax structure. <\/p>\n

At the same time, Fox said, many of Nebraska\u2019s peer states are working to reduce their individual income tax rates in a nationwide competition for workers. <\/p>\n

\u201cThis suggests a significant effort on personal income tax would be important if Nebraska wants to buy further growth that will increase Nebraska\u2019s tax base well into the future,\u201d she said. <\/p>\n

The committee took no immediate action on either bill. <\/p>\n","protected":false},"excerpt":{"rendered":"

Nebraska\u2019s top corporate and individual income tax rates would fall to 5.84 percent by 2026 under proposals heard Jan. 27 by the Revenue Committee.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[17],"tags":[190],"class_list":["post-31288","post","type-post","status-publish","format-standard","hentry","category-revenue","tag-sen-lou-ann"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/31288","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31288"}],"version-history":[{"count":2,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/31288\/revisions"}],"predecessor-version":[{"id":31290,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=\/wp\/v2\/posts\/31288\/revisions\/31290"}],"wp:attachment":[{"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31288"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31288"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/update.legislature.ne.gov\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31288"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}