Bill Summary – FastDemocracy

LB1400                                                                            LB1400
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                             LEGISLATURE OF NEBRASKA
                          ONE HUNDRED EIGHTH LEGISLATURE
                                   SECOND SESSION
                    LEGISLATIVE BILL 1400
     Introduced by Ballard, 21; at the request of the Governor.
     Read first time January 17, 2024
     Committee: Revenue
 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
      77-2715.07,   77-2716,     77-2717,    and    77-2734.03,   Revised Statutes
      Supplement,   2023;   to adopt the Relocation Incentive Act;   to
      harmonize provisions; and to repeal the original sections.
  Be it enacted by the people of the State of Nebraska,
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         Section 1.       Sections 1 to 5 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 against the income tax
    imposed by the Nebraska Revenue Act of 1967.
         (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
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 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.
         Sec. 4.       (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
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 brackets under subsection (3) of section 77-2715.03.
         Sec.    5.        The department may adopt and promulgate rules and
 regulations to carry out the Relocation Incentive Act.
         Sec. 6. 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 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
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    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;
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        (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
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  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   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
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 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 the credit for such year, the credit may be carried
 forward to subsequent taxable years until fully utilized.
         (c) No more than one credit may be claimed under this subsection
 with respect to a single residence.
         (d) The credit provided in this subsection shall be subject to
 recapture by the Department of Revenue if the individual claiming the
 credit sells or otherwise transfers the residence or quits using the
 residence as his or her primary residence within five years after the end
 of the taxable year in which the credit was claimed.
         (e)     For purposes of     this subsection,       family member means an
 individual's spouse,   child,    parent,       brother,     sister,    grandchild,        or
 grandparent, whether by blood, marriage, or adoption.
         (8) There shall be allowed to all individuals refundable credits
 against the income tax imposed by the Nebraska Revenue Act of 1967 as
 provided in the Nebraska Biodiesel Tax Credit Act, the Nebraska Higher
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 Blend Tax Credit Act,    the Nebraska Property Tax Incentive Act,