Nebraska Tax Law Alert: Changes to Property, Sales & Income Taxes
PROPERTY TAX RELIEF
The Nebraska Legislature has appropriated $105 million (2007) and $115 million (2008) to be distributed among Nebraska’s 93 counties as property tax relief. The credit applies to all real property, including residences, commercial property, and farmland. While the Legislature’s target benefit is approximately $83 per $100,000 of valuation, counties with higher assessed property values (such as urban counties) will receive a greater portion of the funds than counties with lower assessed property values.
SALES TAX ON COMMERCIAL REMODELING AND RENEWABLE ENERGY PROJECTS
Effective for services performed on or after October 1, 2007, the sales tax on commercial remodeling construction labor has been repealed.
MAJOR STATE INCOME TAX CHANGES
- The earned income tax credit has been increased from 8% to 10% of the federal credit.
- The Nebraska “marriage penalty” has been eliminated. For married taxpayers filing jointly, the Nebraska income tax rates are now twice the rates for single taxpayers.
- The Nebraska Legislature is considering a bill that would allow shareholders of an S corporation bank a credit for their share of the bank’s Nebraska franchise tax. Final details are still under negotiation, but the proposed credit would be 50% of the franchise tax paid in 2007 and 2008 and 100% of the franchise tax paid beginning in 2009.
- The Nebraska income tax deduction for contributions to the College Savings Plan of Nebraska was raised from $1,000 to $5,000 ($2,500 if married filing separately).