Nebraska Enacts Changes to Sales Tax and Tax Credit Laws

Nebraska Enacts Changes to Sales Tax and Tax Credit Laws

Nebraska Governor Pete Rickets has signed legislation amending certain sales and use tax exemption and tax credit provisions, in addition to providing for a new income tax credit relating to an employer’s payment for an eligible employee’s postsecondary education under LB 774.

Highlights of this legislation include:

• Sales tax exemptions. The law provides that sales and use taxes shall not be imposed on the gross receipts from the sale, lease, or rental of and the storage, use, or other consumption in this state of purchases by substance abuse treatment centers licensed under the Health Care Facility Licensure Act and also centers for independent living as defined in 29 USC § 796a. A sales and use tax exemption is also created for county agricultural societies, and certain property purchases made by a qualifying museum.
• Income tax credit. On or after January 1, 2017, the law provides for a non-refundable income tax credit relating to an employer’s payment of an eligible employee’s tuition at a Nebraska public institution of postsecondary education or the payment of the costs associated with a high school equivalency program for eligible employees, including the transportation to and from work. The credit is applicable for a period of no more than two years, in the amount of 20% of the employer’s annual associated employee expenditures, as long as they are incidental to the employer’s business. This credit shall also not exceed the employer’s actual tax liability for such taxable year.
• Insurance company use of tax credits. The law further provides that an insurance company’s use of a tax credit is considered a payment of tax and does not require the company to pay additional retaliatory tax on that amount.

Historic property renovation credit. For calendar years beginning on or after January 1, 2017, the historic property renovation amount is limited to $15 million with $4 million reserved for those applicants seeking a credit of less than $100,000. If by April 1, the credits for less than $100,000 are not allocated, then the amounts will be available based on an applicant’s priority date. If the amount of credits allocated in any calendar year is less than fifteen million dollars, the unused amount shall be carried forward to subsequent years and shall be available for allocation in subsequent years until fully utilized, except as otherwise provided in section 77-2912

By: Nikki Snow