09/05/2015

Nebraska's Tax Law Changes In 2015

Nebraska’s 2015 legislative session has come and gone. During that session, Nebraska’s Legislature enacted a number of tax law changes which may affect you and your clients. Significant changes include the following:

• Fuel Tax Increase. The tax change that likely generated the most controversy was the Legislature’s increase in Nebraska’s fuel tax. The Legislature raised the fixed portion of the motor fuels tax rate by 1.5¢ per gallon per year for the next four years, starting January 1, 2016. Of the two components of the fixed rate, the Nebraska Department of Roads’ portion will increase 0.5¢ every year, from 7.5¢ to 9.5¢ per gallon by 2019. The remaining portion, which is allocated to cities and counties, will increase 1¢ per gallon every year, from 2.8¢ to 6.8¢ per gallon by 2019. After the increases are fully enacted (on January 1, 2019), the total fixed rate motor fuels tax will be 16.3¢ per gallon.
• Nebraska Angel Investment Tax Credit Changes. Due to the popularity of this program, the total amount of refundable Angel Investment tax credits available for qualified investors or funds was raised from $3 million to $4 million per calendar year. The Legislature also enacted certain reporting changes for each qualified small business, qualified investor, and qualified fund.
• ABLE Program. The Legislature established the Achieving a Better Life Experience (ABLE) program and mandated that the State Treasurer implement the program. The ABLE program allows people to set up tax-exempt 529A savings accounts for the purpose of supporting individuals with disabilities.
• Personal Property Tax Relief Act. The Legislature passed the Personal Property Tax Relief Act, which established a property tax exemption on the first $10,000 of value of tangible personal property in each taxing district in which a personal property tax return is required to be filed. The Act also includes a compensating exemption factor for companies that are centrally assessed by Nebraska to be used in determining the total tax obligation exemption for those companies. On or before each November 30, the county treasurer in each Nebraska county must certify to the State Tax Commissioner the total tax revenue lost to all taxing subdivisions within the county from the exemption.
• Exemption For Sanitary Drainage Districts. The Legislature included sanitary drainage districts in municipalities to the list of Nebraska political entities whose purchases are exempt from sales and use taxes.
• Exemption For Zoos. The Legislature exempted, from Nebraska sales and use tax, any sale of a membership in or an admission to, or any purchase by, a nationally accredited zoo or aquarium operated by a public agency or nonprofit corporation primarily for educational, scientific, or tourism purposes.
• Correction Of Errors In Valuation. The Property Tax Administrator may correct errors in the valuation of centrally assessed property in Nebraska for up to three years after the value is certified or the date tax is distributed to a county.
• Exemption For Fraternal Benefit Society. Effective in 2016, the property owned by a fraternal benefit society will be exempt from property tax. Currently, property owned by a charity is exempt from Nebraska property tax if the property is used exclusively for charitable purposes. Nebraska amended its law to include a fraternal benefit society as a type of charitable organization.

If you believe one of these changes may impact you or your clients, please contact a member of the McGrath North Tax Group to discuss these further.