On Thursday, Nebraska lawmakers approved a massive $6.4 billion tax relief package. The bill includes several tax relief measures, but the main one is the increased property tax credits from Nebraska.
Increased Property Tax Credits From Nebraska
Introduced by Albion Sen. Tom Briese, bill LB243 raises the property tax credits for Nebraska residents. The bill gradually raises the minimum amount of relief under the Property Tax Credit Act from $275 million to $475 million by tax year 2028.
The following year, the property tax credits from Nebraska will increase by the percentage growth in the total assessed value of the real properties in the state over the last year and by $75 million more. Thereafter, the credit amount will continue to rise by the percentage growth in the value of properties statewide.
Additionally, LB243 removes the 5% limit on the school district tax credit’s allowable growth percentage under the Nebraska Property Tax Incentive Act. The bill also eliminates the state’s community college area levy after the fiscal year 2023-24. Starting next year, Nebraska will allocate funds to community colleges to compensate for the lost property tax revenue.
Nebraska’s Department of Revenue estimates that the bill would lower the general fund revenue by $1.8 billion from the fiscal year 2024-25 to FY2030-31. LB243 was approved unanimously (44-0) and takes effect immediately.
Other Approved Tax Relief Measures
Apart from the property tax credits from Nebraska, the lawmakers approved several other tax relief measures, including income tax cuts. Introduced by Elkhorn Sen. Lou Ann Linehan, LB754 reduces the individual and corporate income tax rates to 3.99% by the tax year 2027.
The bill also exempts Social Security income from the state income tax starting tax year 2024. It also enables federal retirees to exclude the money they received as annuities from their federal adjusted gross income.
Additionally, LB754 authorizes the state Department of Revenue to approve up to $15 million annually in the form of refundable income tax credits. The objective of this credit is to assist parents and legal guardians in paying for childcare. This provision was part of LB318, which Sen. Eliot Bostar of Lincoln introduced.
LB754 also raises the tax credits (under the School Readiness Tax Credit Act) for qualifying childcare providers and employees from $5 million to $7.5 million each year. This bill is estimated to reduce the state’s general fund revenue by $3.3 billion from the fiscal year 2023-24 to FY2028-29. Bill LB754 (39-2 vote) also takes effect immediately.
Separately, the $6.4 billion tax relief also includes LB583, which directs about $300 million annually in additional funding to K-12 public schools.
Introduced by Bellevue Sen. Rita Sanders, LB583 gives $1,500 in foundation aid per student to public school districts starting with the school fiscal year 2023-24. This bill was passed by a 44-0 vote and takes effect immediately.
This article originally appeared on ValueWalk
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