There have been several articles written and numerous newscasts suggesting that, somehow, property taxpayers lost out on their 2023 income tax rebate with the passage of LB34. I will devote this week’s article to explaining the misunderstandings and bringing more clarity to the situation. In the end, no one lost out, but some did end up with a bonus depending upon the timing of when they paid their 2023 property taxes.

LB1107 was passed by the Legislature in 2020 and was referred to as the Nebraska Property Tax Incentive Act. It created an income tax credit to help offset the property taxes paid to your local public school district. In most cases, property taxpayers receive their property tax statement in December of each tax year after all the taxing authorities have approved their budgets. Those property taxes are then “due” on December 31 of that year, but in all counties except Douglas, Sarpy, and Lancaster, the taxes for the current tax year are not delinquent if the first half is paid on or before May 1 of the following calendar year, and the second half if paid on or before September 1, of the following calendar year. In Douglas, Sarpy, and Lancaster counties, the taxes must be paid on or before April 1, and August 1.

Property taxpayers who paid their 2019 property taxes in 2020 could claim the income tax credit on their tax return in 2021. The total credits claimed in 2021 was $82 million out of $125 million available. The difference represented those who failed to claim the credit. Property taxpayers who paid their 2020 property taxes in 2021 were able to claim their credit in 2022. Total credits claimed amounted to $422 million out of the $548 million appropriated. Taxpayers who paid their 2021 property taxes in 2022 were able to claim their credit on their 2023 income tax return. That totaled $562 million in credits claimed out of $763 available. Finally, taxpayers who paid their 2022 property taxes in 2023 were able to claim their credit on their 2024 income tax return. The total claimed was $477 million out of $809 million available.

In this summer’s special session, the Legislature passed LB34 which eliminated the LB1107 income tax credit and replaced it with a direct property tax credit; that means taxpayers will no longer need to claim a credit on their income tax return. Instead, a credit will appear on your property tax statement along with the existing property tax credit passed in 2007. This will allow all Nebraskans the ability to receive the credit without taking any further action, thus eliminating the gap between the credits paid and the credits available. The property tax credit will begin this year and will be reflected on your property tax statement be mailed to you in December 2024 by the local County Treasurer. The state will simply pay the credit directly to each county when the statements go to the taxpayers to make the counites whole.

Had LB34 not been passed, any property taxes assessed for the 2023 property tax year paid in 2024 would have been eligible for the income tax credit in 2025. Instead, you will automatically receive your credit on your 2024 property tax statement. If you pay your property taxes in the following year, you will pay the reduced property tax bill in 2025 instead of receiving an income tax credit in 2025. The amount of the property tax credit statewide will be $786 million as opposed to just over $500 million had the income tax credit still been in effect.

So, who got a windfall? Those who paid their 2023 property taxes in 2023 instead of 2024 and also claimed their income tax credit in 2024 before the special session will receive both the income tax credit and the property tax credit, but keep in mind that they also paid their real estate taxes well before they were delinquent. Regardless, all taxpayers are receiving more property tax relief because of LB34. The numbers are clear.

In the end, there was no other way to make the transition from the income tax credit, which was costly to apply for and not fully utilized, to the new property tax credit system where every property taxpayer receives their credit. It should also be noted that the state actually paid more to make the transition and every taxpayer will receive at least as much in credits as they would have under the original program. There is no lost year; it is simply a change in how the credit is received.

I want to remind everyone that the Lincoln County Farm Bureau has asked me to participate in a town hall meeting on September 21 at the McKinley Education Center beginning at 6:30 p.m. I hope you will consider attending to get any of your questions answered and share with me any concerns you have.

I look forward to continuing to hear from you regarding issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.