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LEGISLATIVE BILL 1023
Approved by the Governor April 23, 2024
Introduced by von Gillern, 4; Aguilar, 35; Ballard, 21; Bostar, 29; Brandt, 32;
Conrad, 46; DeKay, 40; Holdcroft, 36; Hughes, 24; Ibach, 44;
Kauth, 31; Linehan, 39; Lowe, 37; Murman, 38; Riepe, 12; Vargas,
7; Brewer, 43; Albrecht, 17; Blood, 3.
A BILL FOR AN ACT relating to revenue and taxation; to amend sections 77-2733
and 86-704, Reissue Revised Statutes of Nebraska, sections 77-908,
77-3806, 77-6831, and 81-523, Revised Statutes Cumulative Supplement,
2022, and sections 77-2701, 77-2715.07, 77-2716, 77-2717, and 77-2734.03,
Revised Statutes Supplement, 2023; to adopt the Relocation Incentive Act;
to provide for adjustments to federal adjusted gross income for nonresidents and for certain businesses for research or experimental expenditures and the cost of certain property; to change provisions relating to the taxation of nonresident income; to provide for additional incentives under the ImagiNE Nebraska Act; to change the occupation tax relating to telecommunications services; to harmonize provisions; to provide operative dates; to provide severability; and to repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Sections 1 to 6 of this act shall be known and may be cited as
the Relocation Incentive Act.
Sec. 2. For purposes of the Relocation Incentive Act:
(1) Department means the Department of Revenue; and
(2) Qualifying employee means an individual who moves to the State of
Nebraska for the purpose of accepting a position of employment.
Sec. 3. (1) For taxable years beginning or deemed to begin on or after January 1, 2025, under the Internal Revenue Code of 1986, as amended, an employer that pays relocation expenses for a qualifying employee shall be
eligible to receive a credit that may be used to offset any income taxes due under the Nebraska Revenue Act of 1967, any premium and related retaliatory taxes due under section 44-150, 77-908, or 81-523, or any franchise taxes due under sections 77-3801 to 77-3807.
(2) The credit provided in this section shall be a refundable credit in an amount equal to fifty percent of the relocation expenses that were paid by the employer for a qualifying employee during the taxable year, not to exceed a maximum credit of five thousand dollars per qualifying employee.
(3) No credit shall be granted under this section unless the qualifying employee will receive an annual salary of at least seventy thousand dollars per year and not more than two hundred fifty thousand dollars per year.
(4) Any credit claimed by an employer under this section shall be
recaptured by the department if the qualifying employee moves out of the state within two years after the credit is claimed. Any amount required to be recaptured shall be deemed an underpayment of tax and shall be due and payable on the tax return that is due immediately following the loss of residency.
(5) Notwithstanding any other limitation contained in the laws of this state, collection of any taxes deemed to be an underpayment by this section shall be allowed for a period of three years following the due date of the recaptured taxes.
(6) For taxable years beginning or deemed to begin on or after January 1,
2026, under the Internal Revenue Code of 1986, as amended, the department shall adjust the dollar amounts provided in subsection (3) of this section by the same percentage used to adjust individual income tax brackets under subsection
(3) of section 77-2715.03.
(7) An employer shall apply for the credit provided in this section by
submitting an application to the department on a form prescribed by the department. Subject to subsection (8) of this section, if the department determines that the employer qualifies for tax credits under this section, the department shall approve the application and certify the amount of credits approved to the employer.
(8) The department shall consider applications in the order in which they are received and may approve tax credits under this section in any year until the aggregate limit allowed under section 4 of this act has been reached.
(9) An employer shall claim any tax credits granted under this section by
attaching the tax credit certification received from the department under subsection (7) of this section to the employer's tax return.
(10) An employer claiming a tax credit under the Relocation Incentive Act against any premium and related retaliatory taxes due under section 44-150,
77-908, or 81-523 shall not be required to pay any additional retaliatory tax as a result of claiming the tax credit. The tax credit may fully offset any retaliatory tax imposed under Nebraska law. Any tax credit claimed shall be
considered a payment of tax for purposes of subsection (1) of section
77-2734.03.
Sec. 4. The department may approve tax credits under the Relocation Incentive Act each year until the total amount of credits approved for the year
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reaches five million dollars.
Sec. 5. (1) For taxable years beginning or deemed to begin on or after January 1, 2025, under the Internal Revenue Code of 1986, as amended, a qualifying employee shall be eligible to make a one-time election within two calendar years of becoming a Nebraska resident to exclude all Nebraska-sourced wage income earned and received from an employer, to the extent included in
federal adjusted gross income, if (a) the annual Nebraska-sourced wage income of the position accepted by the qualifying employee is at least seventy thousand dollars per year but not more than two hundred fifty thousand dollars per year and (b) the qualifying employee was not a resident of the state in the year prior to the year in which residency is being claimed for purposes of
qualifying for such exclusion.
(2) For any qualifying employee who fails to maintain residency for two full calendar years following the calendar year in which the exclusion was taken, any reduction in tax as a result of such exclusion shall be fully recaptured from the qualifying employee by the department. The amount required to be recaptured shall be deemed an underpayment of tax and shall be due and payable on the tax return that is due immediately following the loss of
residency.
(3) Notwithstanding any other limitation contained in the laws of this state, collection of any taxes deemed to be an underpayment by this section shall be allowed for a period of three years following the due date of the recaptured taxes.
(4) For taxable years beginning or deemed to begin on or after January 1,
2026, under the Internal Revenue Code of 1986, as amended, the department shall adjust the dollar amounts provided in subsection (1) of this section by the same percentage used to adjust individual income tax brackets under subsection
(3) of section 77-2715.03.
Sec. 6. The department may adopt and promulgate rules and regulations to
carry out the Relocation Incentive Act.
Sec. 7. Section 77-908, Revised Statutes Cumulative Supplement, 2022, is amended to read:
77-908 Every insurance company organized under the stock, mutual,
assessment, or reciprocal plan, except fraternal benefit societies, which is
transacting business in this state shall, on or before March 1 of each year,
pay a tax to the director of one percent of the gross amount of direct writing premiums received by it during the preceding calendar year for business done in
this state, except that (1) for group sickness and accident insurance the rate of such tax shall be five-tenths of one percent and (2) for property and casualty insurance, excluding individual sickness and accident insurance, the rate of such tax shall be one percent. A captive insurer authorized under the Captive Insurers Act that is transacting business in this state shall, on or
before March 1 of each year, pay to the director a tax of one-fourth of one percent of the gross amount of direct writing premiums received by such insurer during the preceding calendar year for business transacted in the state. The taxable premiums shall include premiums paid on the lives of persons residing in this state and premiums paid for risks located in this state whether the insurance was written in this state or not, including that portion of a group premium paid which represents the premium for insurance on Nebraska residents or risks located in Nebraska included within the group when the number of lives in the group exceeds five hundred. The tax shall also apply to premiums received by domestic companies for insurance written on individuals residing outside this state or risks located outside this state if no comparable tax is
paid by the direct writing domestic company to any other appropriate taxing authority. Companies whose scheme of operation contemplates the return of a portion of premiums to policyholders, without such policyholders being claimants under the terms of their policies, may deduct such return premiums or
dividends from their gross premiums for the purpose of tax calculations. Any such insurance company shall receive a credit on the tax imposed as provided in
the Community Development Assistance Act, the Nebraska Job Creation and Mainstreet Revitalization Act, the New Markets Job Growth Investment Act, the Nebraska Higher Blend Tax Credit Act, the Relocation Incentive Act, and the Affordable Housing Tax Credit Act.
Sec. 8. Section 77-2701, Revised Statutes Supplement, 2023, is amended to
read:
77-2701 Sections 77-2701 to 77-27,135.01, 77-27,222, 77-27,235, 77-27,236,
and 77-27,238 to 77-27,241 and section 11 of this act shall be known and may be
cited as the Nebraska Revenue Act of 1967.
Sec. 9. Section 77-2715.07, Revised Statutes Supplement, 2023, is amended to read:
77-2715.07 (1) There shall be allowed to qualified resident individuals as
a nonrefundable credit against the income tax imposed by the Nebraska Revenue Act of 1967:
(a) A credit equal to the federal credit allowed under section 22 of the Internal Revenue Code; and
(b) A credit for taxes paid to another state as provided in section
77-2730.
(2) There shall be allowed to qualified resident individuals against the income tax imposed by the Nebraska Revenue Act of 1967:
(a) For returns filed reporting federal adjusted gross incomes of greater than twenty-nine thousand dollars, a nonrefundable credit equal to twenty-five percent of the federal credit allowed under section 21 of the Internal Revenue Code of 1986, as amended, except that for taxable years beginning or deemed to
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begin on or after January 1, 2015, such nonrefundable credit shall be allowed only if the individual would have received the federal credit allowed under section 21 of the code after adding back in any carryforward of a net operating loss that was deducted pursuant to such section in determining eligibility for the federal credit;
(b) For returns filed reporting federal adjusted gross income of twenty-
nine thousand dollars or less, a refundable credit equal to a percentage of the federal credit allowable under section 21 of the Internal Revenue Code of 1986,
as amended, whether or not the federal credit was limited by the federal tax liability. The percentage of the federal credit shall be one hundred percent for incomes not greater than twenty-two thousand dollars, and the percentage shall be reduced by ten percent for each one thousand dollars, or fraction thereof, by which the reported federal adjusted gross income exceeds twenty-two thousand dollars, except that for taxable years beginning or deemed to begin on
or after January 1, 2015, such refundable credit shall be allowed only if the individual would have received the federal credit allowed under section 21 of the code after adding back in any carryforward of a net operating loss that was deducted pursuant to such section in determining eligibility for the federal credit;
(c) A refundable credit as provided in section 77-5209.01 for individuals who qualify for an income tax credit as a qualified beginning farmer or
livestock producer under the Beginning Farmer Tax Credit Act for all taxable years beginning or deemed to begin on or after January 1, 2006, under the Internal Revenue Code of 1986, as amended;
(d) A refundable credit for individuals who qualify for an income tax credit under the Angel Investment Tax Credit Act, the Nebraska Advantage Microenterprise Tax Credit Act, the Nebraska Advantage Research and Development Act, or the Volunteer Emergency Responders Incentive Act; and
(e) A refundable credit equal to ten percent of the federal credit allowed under section 32 of the Internal Revenue Code of 1986, as amended, except that for taxable years beginning or deemed to begin on or after January 1, 2015,
such refundable credit shall be allowed only if the individual would have received the federal credit allowed under section 32 of the code after adding back in any carryforward of a net operating loss that was deducted pursuant to
such section in determining eligibility for the federal credit.
(3) There shall be allowed to all individuals as a nonrefundable credit against the income tax imposed by the Nebraska Revenue Act of 1967:
(a) A credit for personal exemptions allowed under section 77-2716.01;
(b) A credit for contributions to certified community betterment programs as provided in the Community Development Assistance Act. Each partner, each shareholder of an electing subchapter S corporation, each beneficiary of an estate or trust, or each member of a limited liability company shall report his or her share of the credit in the same manner and proportion as he or she reports the partnership, subchapter S corporation, estate, trust, or limited liability company income;
(c) A credit for investment in a biodiesel facility as provided in section
77-27,236;
(d) A credit as provided in the New Markets Job Growth Investment Act;
(e) A credit as provided in the Nebraska Job Creation and Mainstreet Revitalization Act;
(f) A credit to employers as provided in sections 77-27,238 and 77-27,240;
(g) A credit as provided in the Affordable Housing Tax Credit Act;
(h) A credit to grocery store retailers, restaurants, and agricultural producers as provided in section 77-27,241; and
(i) A credit as provided in the Opportunity Scholarships Act.
(4) There shall be allowed as a credit against the income tax imposed by
the Nebraska Revenue Act of 1967:
(a) A credit to all resident estates and trusts for taxes paid to another state as provided in section 77-2730;
(b) A credit to all estates and trusts for contributions to certified community betterment programs as provided in the Community Development Assistance Act; and
(c) A refundable credit for individuals who qualify for an income tax credit as an owner of agricultural assets under the Beginning Farmer Tax Credit Act for all taxable years beginning or deemed to begin on or after January 1,
2009, under the Internal Revenue Code of 1986, as amended. The credit allowed for each partner, shareholder, member, or beneficiary of a partnership,
corporation, limited liability company, or estate or trust qualifying for an
income tax credit as an owner of agricultural assets under the Beginning Farmer Tax Credit Act shall be equal to the partner's, shareholder's, member's, or beneficiary's portion of the amount of tax credit distributed pursuant to
subsection (6) of section 77-5211.
(5)(a) For all taxable years beginning on or after January 1, 2007, and before January 1, 2009, under the Internal Revenue Code of 1986, as amended,
there shall be allowed to each partner, shareholder, member, or beneficiary of
a partnership, subchapter S corporation, limited liability company, or estate or trust a nonrefundable credit against the income tax imposed by the Nebraska Revenue Act of 1967 equal to fifty percent of the partner's, shareholder's,
member's, or beneficiary's portion of the amount of franchise tax paid to the state under sections 77-3801 to 77-3807 by a financial institution.
(b) For all taxable years beginning on or after January 1, 2009, under the Internal Revenue Code of 1986, as amended, there shall be allowed to each partner, shareholder, member, or beneficiary of a partnership, subchapter S
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corporation, limited liability company, or estate or trust a nonrefundable credit against the income tax imposed by the Nebraska Revenue Act of 1967 equal to the partner's, shareholder's, member's, or beneficiary's portion of the amount of franchise tax paid to the state under sections 77-3801 to 77-3807 by
a financial institution.
(c) Each partner, shareholder, member, or beneficiary shall report his or
her share of the credit in the same manner and proportion as he or she reports the partnership, subchapter S corporation, limited liability company, or estate or trust income. If any partner, shareholder, member, or beneficiary cannot fully utilize the credit for that year, the credit may not be carried forward or back.
(6) There shall be allowed to all individuals nonrefundable credits against the income tax imposed by the Nebraska Revenue Act of 1967 as provided in section 77-3604 and refundable credits against the income tax imposed by the Nebraska Revenue Act of 1967 as provided in section 77-3605.
(7)(a) For taxable years beginning or deemed to begin on or after January
1, 2020, and before January 1, 2026, under the Internal Revenue Code of 1986,
as amended, a nonrefundable credit against the income tax imposed by the Nebraska Revenue Act of 1967 in the amount of five thousand dollars shall be
allowed to any individual who purchases a residence during the taxable year if
such residence:
(i) Is located within an area that has been declared an extremely blighted area under section 18-2101.02;
(ii) Is the individual's primary residence; and
(iii) Was not purchased from a family member of the individual or a family member of the individual's spouse.
(b) The credit provided in this subsection shall be claimed for the taxable year in which the residence is purchased. If the individual cannot fully utilize th