Revenue Committee Advances Proposed Legislation to Reduce Income Tax Rates
The Nebraska Legislature’s Revenue Committee advanced legislation to reduce top individual and corporate income tax rates and change the method of valuing agricultural property. Amendment 954 to Legislative Bill 461 would reduce individual and corporate income tax rates in phases, from 6.84 percent to 5.99 percent, and from 7.81 percent to 5.99 percent, in years when state revenue growth exceeds 3.5 percent. An initial reduction in individual and corporate income tax rates occurs beginning in tax year 2019. Additional reductions in the individual and corporate income tax rates would be contingent on increased state revenue growth.
The state’s refundable earned income tax credit would also increase from ten percent to twelve percent of the federal credit over a two-year period. Amendment 954 would also create a new nonrefundable credit for resident taxpayers with an adjusted gross income below a certain threshold.
A phase-out of the personal exemption credit and the elimination of the historic tax credit and new markets tax credit programs would pay for the initial reduction in the individual and corporate income tax rates.
Baird Holm worked from 2011 through 2014 to put the historic tax credit into law, and we are working to attempt to remove its termination from Amendment 954. The program has been very successful in its first two years, and its benefits are spreading across the state as smaller communities increasingly put it to work redeveloping their main streets.
The amendment proposes an income approach for valuing agricultural property beginning in January 1, 2018, and would cap how fast agricultural property can increase in value over the prior year.
The Revenue Committee prioritized LB 461, and the full Legislature is expected to debate LB 461 the week of April 17. Copies of AM 954 and LB 461 are available on the Nebraska Legislature’s website at http://www.nebraskalegislature.gov/bills/.
Please contact us if you have questions about these bills or any others. Thank you.