As you may recall, under the Good Life Transformational Projects Act, the Nebraska Department of Economic Development was authorized to approve applications to enact “Good Life Districts.” Such districts would have to meet certain development cost and job creation thresholds. Retail sales occurring within a Good Life District would incur a reduced state sales tax rate of 2.75%. The remaining 2.75% of tax would go toward financing the development of the district, although the Good Life Transformational Projects Act did not create a direct way to use those tax funds. The Good Life District Economic Development Act was intended to fill that hole. Under this Act, a city may establish a Good Life District Economic Development program if approved by voters in the city. If a city establishes a Good Life District Economic Development program, the city may issue bonds that would be used to pay for the financing of the development of the Good Life District in that city. To pay off those bonds, the city may establish one or more of the following local taxes: 1. Additional City Sales Tax. The city may establish a local option sales and use tax upon the same transactions that are sourced for sales tax purposes within the Good Life District. The amount of this tax may be the greater of: a) the difference between the normal state sales tax rate and the rate levied on transactions within a good life district, or b) 2.75%. 2. Occupation Tax. The city may impose an occupation tax on all businesses within the Good Life District. 3. Use of City’s Existing Sales Tax. The city may also choose to use the revenue from its existing sales tax on transactions occurring within the Good Life District. If a city imposes an additional sales tax in a Good Life District (option 1 above), those funds cannot be later refunded under the Imagine Nebraska Act or another state incentive program. Insight on These Changes: The Legislature was looking to provide Good Life Districts with another tool for financing the developments that the Legislature enacted the Good Life Transformational Projects Act to incent. RELOCATION INCENTIVE ACT Beginning in 2025, LB 1023 creates incentives for both employers hiring people who move into Nebraska and new residents moving to Nebraska. For employers, the Relocation Incentive Act creates a refundable income tax credit for employers who pay relocation expenses for a qualifying employee who moves to Nebraska for the purpose of accepting a position of employment. The credit is equal to 50% of the relocation expenses and is limited to $5,000 per qualifying employee. An employee must make between $70,000 and $250,000 per year for the employer to qualify for the credit. The credit will be recaptured if the employee moves out of Nebraska within two years after the credit is claimed. In addition, total credits are capped at $5 million per year. For employees, the Act allows new residents to make a one-time election, within two years of becoming a Nebraska resident, to exclude all Nebraska-sourced wage income from an employer if that employee makes between $70,000 and $250,000 per year. The employee must pay those taxes back to Nebraska if the employee moves out of Nebraska within two years after the exclusion is taken. Insight on These Changes: Nebraska has taken a concrete step forward to incent persons to move to Nebraska—and for employers to attract persons to move to Nebraska. Nebraska has realized that it cannot just create new jobs. Nebraska must have ways to attract people to fill those jobs as well. AMENDMENTS TO IMAGINE NEBRASKA ACT LB 1023 amended the Imagine Nebraska Act to specifically allow a property tax exemption for business equipment used primarily for the capture and compression of carbon dioxide, such as at an ethanol plant. LB 1317 also amended the Imagine Nebraska Act to specifically allow property tax exemptions for business equipment used for the manufacturing of liquid fertilizer, other chemicals applied to agricultural crops, and liquid additives for farm vehicle fuel. Insight on This Change: Nebraska continues to recognize the importance of this program in attracting new industry to Nebraska. As needed, amendments are made to the program to maintain its value. PROPERTY TAX EXEMPTION FOR ADDITIONAL LOW-INCOME HOUSING DEVELOPMENTS LB 1326 amended Nebraska law to allow a property tax exemption for the real and personal property of a controlled affiliate of a local housing agency, removing a requirement that such affiliate be wholly owned by the housing agency. Insight on This Change: As many housing developments for low-income individuals are built in a public-private partnership, this will allow more developments to be exempt and thus hopefully increase the supply of housing in Nebraska. ADDITIONAL PROPERTY TAX EXEMPTIONS LB 1317 amended Nebraska law to also allow a property tax exemption for nursing and assisted living facilities, in proportion to the number of beds occupied by Medicaid recipients. For example, if 50% of the beds were used for Medicaid recipients, the facility would receive a 50% exemption. LB 1317 also created a property tax exemption for charitable organizations operating student housing, equivalent to the square footage of the common areas of the housing. Insight on This Change: These changes were intended to help increase the supply of nursing and assisted living facilities in Nebraska, as well as student housing. Another Active Legislative Session While the Governor’s proposed Property Tax Reform package did not pass, the Legislature was still very active in shaping Nebraska’s tax and incentive policies— generally for the better. We acknowledge and appreciate the leadership of the Nebraska business community in making those changes, particularly such groups as CONTINUED FROM PAGE 19 20 Nebraska CPA
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