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LEGISLATURE OF NEBRASKA
ONE HUNDRED SIXTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 615
Introduced by Hilgers, 21.
Read first time January 23, 2019
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 77-2715.01, 77-2715.03, 77-2716, and 77-2734.02, Reissue Revised
3 Statutes of Nebraska, and section 84-612, Revised Statutes
4 Cumulative Supplement, 2018; to provide duties for the Tax Rate
5 Review Committee; to reduce income tax rates as prescribed; to
6 provide for certain transfers from the Cash Reserve Fund; to
7 harmonize provisions; and to repeal the original sections.
8 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 77-2715.01, Reissue Revised Statutes of Nebraska,
2 is amended to read:
3 77-2715.01 (1)(a) Commencing in 1987 the Legislature shall set the
4 rates for the income tax imposed by section 77-2715 and the rate of the
5 sales tax imposed by subsection (1) of section 77-2703. For taxable years
6 beginning or deemed to begin before January 1, 2013, the rate of the
7 income tax set by the Legislature shall be considered the primary rate
8 for establishing the tax rate schedules used to compute the tax.
9 (b) The Legislature shall set the rates of the sales tax and income
10 tax so that the estimated funds available plus estimated receipts from
11 the sales, use, income, and franchise taxes will be not less than three
12 percent nor more than seven percent in excess of the appropriations and
13 express obligations for the biennium for which the appropriations are
14 made, except that for the biennium ending June 30, 2019, the percentage
15 shall not be less than two and one-half percent nor more than seven
16 percent. The purpose of this subdivision is to insure that there shall be
17 maintained in the state treasury an adequate General Fund balance,
18 considering cash flow, to meet the appropriations and express obligations
19 of the state.
20 (c) For purposes of this section, express obligation shall mean an
21 obligation which has fiscal impact identifiable by a sum certain or by an
22 established percentage or other determinative factor or factors.
23 (2) The Speaker of the Legislature and the chairpersons of the
24 Legislature's Executive Board, Revenue Committee, and Appropriations
25 Committee shall constitute a committee to be known as the Tax Rate Review
26 Committee. The Tax Rate Review Committee shall meet with the Tax
27 Commissioner within ten days after July 15 and November 15 of each year
28 and shall determine whether the rates for sales tax and income tax should
29 be changed. In making such determination the committee shall recalculate
30 the requirements pursuant to the formula set forth in subsection (1) of
31 this section, taking into consideration the appropriations and express
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1 obligations for any session, all miscellaneous claims, deficiency bills,
2 and all emergency appropriations. The committee shall prepare an annual
3 report of its determinations under this section. The committee shall
4 submit such report electronically to the Legislature and shall append the
5 tax expenditure report required under section 77-382 and the revenue
6 volatility report required under section 50-419.02.
7 In the event it is determined by a majority vote of the committee
8 that the rates must be changed as a result of a regular or special
9 session or as a result of a change in the Internal Revenue Code of 1986
10 and amendments thereto, other provisions of the laws of the United States
11 relating to federal income taxes, and the rules and regulations issued
12 under such laws, the committee shall petition the Governor to call a
13 special session of the Legislature to make whatever rate changes may be
14 necessary.
15 (3) Beginning in November 2019 and each November thereafter until
16 the top corporate and individual income tax rates are set at five and
17 ninety-nine hundredths percent, the Tax Rate Review Committee shall
18 examine the expected rate of growth in net General Fund receipts from the
19 current fiscal year to the upcoming fiscal year, as determined by the
20 Nebraska Economic Forecasting Advisory Board, and shall determine the
21 balance of the Cash Reserve Fund. If the expected rate of growth in net
22 General Fund receipts is at least three and one-half percent for the
23 upcoming fiscal year and the balance of the Cash Reserve Fund is at least
24 five hundred million dollars, the Tax Rate Review Committee shall:
25 (a) Certify such rate of growth and balance to the Tax Commissioner.
26 Upon receipt of each such certification, the Tax Commissioner shall
27 reduce the top corporate income tax rate in accordance with subdivision
28 (1)(c) of section 77-2734.02 and shall reduce the top individual income
29 tax rate in accordance with subsection (3) of section 77-2715.03; and
30 (b) Certify such rate of growth and balance to the State Treasurer.
31 Upon receipt of each such certification, the State Treasurer shall make
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1 the transfer prescribed in subsection (13) of section 84-612.
2 (4) If income tax rates are reduced as described in subsection (3)
3 of this section, the Tax Commissioner and the Legislative Fiscal Analyst
4 shall adjust the forecast provided by the Nebraska Economic Forecasting
5 Advisory Board to reflect the reduction and certify the adjusted forecast
6 to the Governor and the Legislature no later than five days following the
7 meeting of the Tax Rate Review Committee.
8 Sec. 2. Section 77-2715.03, Reissue Revised Statutes of Nebraska, is
9 amended to read:
10 77-2715.03 (1) For taxable years beginning or deemed to begin on or
11 after January 1, 2013, and before January 1, 2014, the following brackets
12 and rates are hereby established for the Nebraska individual income tax:
13 Individual Income Tax Brackets and Rates
14 Bracket Single Married, Head of Married, Estates Tax
15 Number Individuals Filing Household Filing and Rate
16 Jointly Separate Trusts
17 1 $0-2,399 $0-4,799 $0-4,499 $0-2,399 $0-499 2.46%
18 2 $2,400- $4,800- $4,500- $2,400- $500-
19 17,499 34,999 27,999 17,499 4,699 3.51%
20 3 $17,500- $35,000- $28,000- $17,500- $4,700-
21 26,999 53,999 39,999 26,999 15,149 5.01%
22 4 $27,000 $54,000 $40,000 $27,000 $15,150
23 and Over and Over and Over and Over and Over 6.84%
24 (2) For taxable years beginning or deemed to begin on or after
25 January 1, 2014, and before January 1, 2020, the following brackets and
26 rates are hereby established for the Nebraska individual income tax:
27 Individual Income Tax Brackets and Rates
28 Bracket Single Married, Head of Married, Estates Tax
29 Number Individuals Filing Household Filing and Rate
30 Jointly Separate Trusts
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1 1 $0-2,999 $0-5,999 $0-5,599 $0-2,999 $0-499 2.46%
2 2 $3,000- $6,000- $5,600- $3,000- $500-
3 17,999 35,999 28,799 17,999 4,699 3.51%
4 3 $18,000- $36,000- $28,800- $18,000- $4,700-
5 28,999 57,999 42,999 28,999 15,149 5.01%
6 4 $29,000 $58,000 $43,000 $29,000 $15,150
7 and Over and Over and Over and Over and Over 6.84%
8 (3) For taxable years beginning or deemed to begin on or after
9 January 1, 2020, the following brackets and rates are hereby established
10 for the Nebraska individual income tax:
11 Individual Income Tax Brackets and Rates
12 Bracket Single Married, Head of Married, Estates Tax
13 Number Individuals Filing Household Filing and Rate
14 Jointly Separate Trusts
15 1 $0-2,999 $0-5,999 $0-5,599 $0-2,999 $0-499 2.46%
16 2 $3,000- $6,000- $5,600- $3,000- $500-
17 17,999 35,999 28,799 17,999 4,699 3.51%
18 3 $18,000- $36,000- $28,800- $18,000- $4,700-
19 28,999 57,999 42,999 28,999 15,149 5.01%
20 4 $29,000 $58,000 $43,000 $29,000 $15,150
21 and Over and Over and Over and Over and Over 6.84% *
22 (* Subject to change as described below)
23 Each time that certification is received pursuant to subsection (3)
24 of section 77-2715.01, the Tax Commissioner shall adjust the income tax
25 rate for bracket number 4 according to the following schedule:
26 (a) The first time such certification is received, the rate shall be
27 reduced to 6.75%;
28 (b) The second time such certification is received, the rate shall
29 be reduced to 6.50%;
30 (c) The third time such certification is received, the rate shall be
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1 reduced to 6.25%; and
2 (d) The fourth time such certification is received, the rate shall
3 be reduced to 5.99%.
4 (4) Each time the tax rate for bracket number 4 is reduced pursuant
5 to subsection (3) of this section, such rate shall take effect for
6 taxable years beginning or deemed to begin on or after the first January
7 1 following such reduction. The reduced rate shall remain in place until
8 the next reduction takes effect, if any.
9 (5)(a) (3)(a) For taxable years beginning or deemed to begin on or
10 after January 1, 2015, the minimum and maximum dollar amounts for each
11 income tax bracket provided in subsections subsection (2) and (3) of this
12 section shall be adjusted for inflation by the percentage determined
13 under subdivision (5)(b) (3)(b) of this section. The rate applicable to
14 any such income tax bracket shall not be changed as part of any
15 adjustment under this subsection. The minimum and maximum dollar amounts
16 for each income tax bracket as adjusted shall be rounded to the nearest
17 ten-dollar amount. If the adjusted amount for any income tax bracket ends
18 in a five, it shall be rounded up to the nearest ten-dollar amount.
19 (b)(i) For taxable years beginning or deemed to begin on or after
20 January 1, 2015, and before January 1, 2018, the Tax Commissioner shall
21 adjust the income tax brackets by the percentage determined pursuant to
22 the provisions of section 1(f) of the Internal Revenue Code of 1986, as
23 it existed prior to December 22, 2017, except that in section 1(f)(3)(B)
24 of the code the year 2013 shall be substituted for the year 1992. For
25 2015, the Tax Commissioner shall then determine the percent change from
26 the twelve months ending on August 31, 2013, to the twelve months ending
27 on August 31, 2014, and in each subsequent year, from the twelve months
28 ending on August 31, 2013, to the twelve months ending on August 31 of
29 the year preceding the taxable year. The Tax Commissioner shall prescribe
30 new tax rate schedules that apply in lieu of the schedules set forth in
31 subsections subsection (2) and (3) of this section.
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1 (ii) For taxable years beginning or deemed to begin on or after
2 January 1, 2018, the Tax Commissioner shall adjust the income tax
3 brackets based on the percentage change in the Consumer Price Index for
4 All Urban Consumers published by the federal Bureau of Labor Statistics
5 from the twelve months ending on August 31, 2016, to the twelve months
6 ending on August 31 of the year preceding the taxable year. The Tax
7 Commissioner shall prescribe new tax rate schedules that apply in lieu of
8 the schedules set forth in subsections subsection (2) and (3) of this
9 section.
10 (6) (4) Whenever the tax brackets or tax rates are changed by the
11 Legislature, the Tax Commissioner shall update the tax rate schedules to
12 reflect the new tax brackets or tax rates and shall publish such updated
13 schedules.
14 (7) (5) The Tax Commissioner shall prepare, from the rate schedules,
15 tax tables which can be used by a majority of the taxpayers to determine
16 their Nebraska tax liability. The design of the tax tables shall be
17 determined by the Tax Commissioner. The size of the tax table brackets
18 may change as the level of income changes. The difference in tax between
19 two tax table brackets shall not exceed fifteen dollars. The Tax
20 Commissioner may build the personal exemption credit and standard
21 deduction amounts into the tax tables.
22 (8) (6) For taxable years beginning or deemed to begin on or after
23 January 1, 2013, the tax rate applied to other federal taxes included in
24 the computation of the Nebraska individual income tax shall be 29.6
25 percent.
26 (9) (7) The Tax Commissioner may require by rule and regulation that
27 all taxpayers shall use the tax tables if their income is less than the
28 maximum income included in the tax tables.
29 Sec. 3. Section 77-2716, Reissue Revised Statutes of Nebraska, is
30 amended to read:
31 77-2716 (1) The following adjustments to federal adjusted gross
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1 income or, for corporations and fiduciaries, federal taxable income shall
2 be made for interest or dividends received:
3 (a)(i) There shall be subtracted interest or dividends received by
4 the owner of obligations of the United States and its territories and
5 possessions or of any authority, commission, or instrumentality of the
6 United States to the extent includable in gross income for federal income
7 tax purposes but exempt from state income taxes under the laws of the
8 United States; and
9 (ii) There shall be subtracted interest received by the owner of
10 obligations of the State of Nebraska or its political subdivisions or
11 authorities which are Build America Bonds to the extent includable in
12 gross income for federal income tax purposes;
13 (b) There shall be subtracted that portion of the total dividends
14 and other income received from a regulated investment company which is
15 attributable to obligations described in subdivision (a) of this
16 subsection as reported to the recipient by the regulated investment
17 company;
18 (c) There shall be added interest or dividends received by the owner
19 of obligations of the District of Columbia, other states of the United
20 States, or their political subdivisions, authorities, commissions, or
21 instrumentalities to the extent excluded in the computation of gross
22 income for federal income tax purposes except that such interest or
23 dividends shall not be added if received by a corporation which is a
24 regulated investment company;
25 (d) There shall be added that portion of the total dividends and
26 other income received from a regulated investment company which is
27 attributable to obligations described in subdivision (c) of this
28 subsection and excluded for federal income tax purposes as reported to
29 the recipient by the regulated investment company; and
30 (e)(i