Important Update: Changes to Nebraska Property Tax Credits

During a special session, the Nebraska Legislature passed Legislative Bill 34 (LB34), significantly changing the state’s Property Tax Credit system. These updates are essential for all property owners in Nebraska, as they directly impact how property tax credits will be applied moving forward.

Here’s what you need to know about LB34 and how it may affect your property taxes:

Overview of LB34

LB34, signed into law by Governor Jim Pillen on August 20, 2024, introduces the Property Tax Growth Limitation Act and the School District Property Tax Relief Act. These changes are designed to streamline and modify the current Property Tax Credit system, which has important implications for Nebraska taxpayers.

Critical Changes to Property Tax Credits

1. Direct Reduction of Real Estate Taxes
   • Starting with the 2024 tax year, LB34 alters how property tax credits are applied.
     1. Previously: You would claim your Property Tax Credit on your Nebraska Income Tax Return. This resulted in tax savings and even refunds from the state of Nebraska
     2. Going forward: You’ll see a direct reduction in your real estate taxes. This will remove the credit previously received on your tax return and thus may impact your final results.
   • This change will take effect with your December 2024 real estate tax assessment, with payments due in two installments in 2025.
2. End of School District Property Tax Credit on Income Tax Returns
   • For tax years beginning on or after January 1, 2024, the school district portion of the Property Tax Credit will no longer be available on Nebraska Income Tax Returns. If you typically claim this credit, you’ll no longer see it reflected on your tax return. Instead, you’ll benefit directly from lower real estate taxes.
3. Ongoing Community College Property Tax Credit
   • The Property Tax Credit for community college taxes will continue through 2024, with a credit equal to 100% of those taxes paid. However, this credit is expected to expire after the 2024 tax year due to upcoming changes in how community colleges are funded.

What This Means for You

These changes simplify the process and ensure taxpayers receive the full benefit of the Property Tax Credit more straightforwardly. While the adjustments might seem complex initially, they ultimately provide a more direct reduction in your property tax bill rather than waiting to claim a credit on your income tax return.

If you have any questions about how these changes might affect you or your property taxes, please don’t hesitate to contact our team. We are here to help you navigate these updates and ensure your tax planning is aligned with the new regulations.

Stay informed, and plan to make the most of these changes in the coming tax year.