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(Lincoln, NE) Gov. Dave Heineman upheld his pledge to work with the Legislature and achieve the second step in an annual approach to tax relief by signing LB 968 into law. The package is expected to provide approximately $90 million a year in income, sales and property tax relief.
“I want to thank the Legislature for sending LB 968 to my desk,” Gov. Heineman said. “For the second year in a row, we have been successful in our efforts to begin reversing the tax burden on Nebraska families and businesses. It is this kind of collaboration that is making a difference for taxpayers across our state.”
LB 968 follows a set of bills that created the Nebraska Advantage jobs-creation package that was jointly developed by the Governor and legislative leaders. This year, members of the Legislature’s Revenue Committee worked with the Governor to draft a package that would provide comprehensive tax relief for individuals and families.
The package adjusts state income tax brackets, includes an earned income tax credit for low-income Nebraskans, in addition to repealing previous restrictions on claiming itemized deductions, personal exemptions and standard deductions for higher-wage earners.
A married couple with two children earning a combined $15,000 per year in adjusted gross income will receive approximately $350 in tax relief. The same couple earning $25,000 a year will receive $205 in relief. Similar couples earning $60,000 would receive an estimated $70 in relief, as would families earning incomes of $100,000.
Sen. Pam Redfield of Omaha, who sponsored LB 968 and supported income tax adjustments in particular, said, “This bill allows me to end my eight years in the Legislature as I began them, by sponsoring tax-relief legislation. The different parts of this bill work together to benefit a broad spectrum of Nebraskans.”
Sen. Dave Landis of Lincoln, chairman of the Revenue Committee, proposed the idea of an earned income tax credit and pushed for its inclusion in the package.
A second part of the tax-relief package requires land zoned for agricultural uses to be assessed at 75 percent of the property’s actual value, which will help provide property tax relief to farmers and ranchers. A third element repeals the sales tax on home repair labor, overturning the residential tax levied on homeowners.
“The most difficult tax to attack at the state level is property taxes, but I believe this bill advances the cause on behalf of the men and women who power our state’s most important industry – agriculture, thanks to the leadership of Senator Bob Kremer,” Gov. Heineman said. “I am also gratified that we have been successful in repealing a tax on those who maintain and improve their homes, thanks to Senators Ray Janssen and Gwen Howard.”
The package also takes a significant step toward helping senior citizens on fixed incomes remain in their homes. LB 968 expands the Homestead Exemption program by raising the maximum amount of a property’s value available to be exempted from property taxes up to 100 percent of the average home value in the county or $40,000, whichever is greater. It also raises the amount of exemption for handicapped citizens and military veterans to 120 percent of the average home value in the county or $50,000, whichever is greater. Previous exemptions had allowed up to 80 and 100 percent of the average home value, respectively.
LB 968 also increases the maximum assessed value of homes eligible for the Homestead tax exemption to homes worth 200 percent of the average home value in the county or $95,000, whichever is greater. Veterans and the disabled can qualify for an exemption on homes worth up to 225 percent of the average value in the county or $110,000, whichever is greater. The previous limitations had been set at 150 and 175 percent.
“I am especially pleased that we were able to expand the Homestead Exemption,” Gov. Heineman said. “Providing our retirees, veterans and the disabled with the reassurance that they can afford to remain in their homes is an issue that we all care a great deal about, and Senator Jeanne Combs deserves credit for bringing the issues to light.”
A final component of the tax-relief package, backed by Sen. Tom Baker of Trenton, clarifies how Nebraska tax law handles bonus depreciation of capital investments in excess of $25,000 to the benefit of taxpayers, which brings Nebraska in line with federal regulations.
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