A couple of weeks ago, I provided an update LB 825, a tax relief bill that failed to get the necessary votes to break a filibuster. This week, the story is quite different. The same $1 billion structural tax relief package (focused on addressing our income, property, and Social Security taxes)  passed through the final round of debate this past Thursday!

First, LB 873 will lower our state’s highest individual income tax bracket rate by 1% over the course of three tax years. As mentioned a few weeks ago, most Nebraskans fall into our state’s highest tax bracket, since the threshold is only $29,000/year if you are filing single and $58,000/year if you are filing jointly. This cut will save Nebraska taxpayers over $340 million dollars each year when fully implemented.

Next, LB 873 will decrease our state’s corporate income tax rate on income in excess of $100,000 dollars by 1.41% over the next four tax years. This will put our corporate income tax rate in-line with our individual rate, which will encourage Nebraskans to start businesses in our state and attract businesses to our area. This provision will give over $415 million dollars back to our taxpayers by tax year 2026.

LB 873 also makes a number of changes to address our high property taxes. This bill creates a new income tax credit for community college property taxes, putting $195 million dollars in that income tax credit fund in tax year 2026. Also, LB 873 will set a floor for the Property Tax Credit Fund at $548 million dollars. Both of these funds, when their minimum is reached, will then continue to grow by 5% annually to provide long-term tax relief.

Finally, LB 873 completely exempts Social Security income from state taxes. Although it was the intent of the Legislature to phase out this tax by 2030, this bill will accelerate that timeline by five years, saving our retirees over $73 million dollars in tax year 2027. Because of LB 873, we have the opportunity to leave taxing Social Security payments in the past and join the 37 other states that exempt these payments.

All in all, in tax year 2026, this package totals $1.5 billion dollars in tax cuts for hardworking Nebraskans. And, although LB 873 does not go far enough for people to consider Nebraska a “low-tax” state, it is a strong start.

As always, I welcome your input on issues important to you. Follow along on my Facebook and Twitter pages, both entitled “Senator Julie Slama” for more updates, or contact me directly at Senator Julie Slama, District 1 State Capitol, PO Box 94604, Lincoln NE 68509-4604; telephone: 402-471-2733; email: jslama@leg.ne.gov.