This past week was the final week of committee hearings and full day debate began on March 27th. We are now debating priority bills all day and into the evening as the speaker schedules. Committee priority bills will most likely take up most of our time. This week we will look at one of the Revenue Committees priority bills LB754.

LB754 will lower personal and corporate income tax rate for the top tax bracket. This is a gradual reduction that will ultimately stop at 3.99% by 2027 tax year. This bill includes a committee amendment (AM906) which incorporates provisions from the following six related tax bills.

LB38 will allow a deduction from federal adjusted gross income for amounts received as annuities under the Federal employee retirement system or civil service retirement system. This bill does allow withholding of state tax for federal pensions and annuities for retirees of federal agencies.

LB173 clarifies that compensation paid to a nonresident in the state shall not constitute income derived from this state if it meets three different criteria. First, compensation is paid for employment while present in state for 15 days or less. Second, the individual performed employment duties in more than one state during the tax year. Finally, the compensation is not paid for duties performed in the capacity as a professional athlete, professional entertainer, or public figure.

LB318 creates the Child Care Tax Credit Act and allows for eligible parents or guardians a tax credit against tax imposed for qualified individuals whose child receives qualified care or is enrolled in child care subsidy. Parents whose household income is less than or equal to 100% of the federal poverty level also qualify for the tax credit. It also provides a credit equal to either 75% or 100% for taxpayers making qualified contributions to establish or operate qualified programs for child care. A tax credit of up to $2,000 for a household with an income of not more than $75,000 and a $1,000 credit for a household with an income between $75,000 and $150,000. This credit is limited to tax owed and can be carried forward 5 years.
LB492 extends the expiration date on the Federal Tax Cuts and Jobs Act that eliminated the factory tax creating the immediate cost recovery for investments in business machinery and equipment used for research or experimental purposes. The Act previously expired on January 1, 2023 and resulted in raised taxes on business investments.

LB497 provides any individual who itemized deductions on their federal tax return shall be allowed to deduct from their federal adjusted gross income either the standard deduction or their federal itemized deductions plus the total amount of state and local property taxes they paid, whichever is greater.

LB641 accelerates the phasing out of taxation on social security benefits by 2024. Previously, taxation of these benefits was set to expire in 2025.

For additional more information on bills please visit nebraskalegislature.gov. You may reach my office at 402-471-2719 or bbostelman@leg.ne.gov.