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LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
FIRST SPECIAL SESSION
LEGISLATIVE BILL 7
Introduced by Blood, 3.
Read first time July 25, 2024
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend section
2 77-2715.03, Revised Statutes Supplement, 2023; section 77-2716,
3 Revised Statutes Supplement, 2023, as amended by Laws 2024, LB937,
4 section 75, Laws 2024, LB1023, section 10, Laws 2024, LB1317,
5 section 85, and Laws 2024, LB1394, section 1; and Laws 2024, LB1023,
6 sections 3 and 5; to change provisions relating to individual income
7 tax rates; to harmonize provisions; to repeal the original sections;
8 and to declare an emergency.
9 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Section 77-2715.03, Revised Statutes Supplement, 2023, is
2 amended to read:
3 77-2715.03 (1) For taxable years beginning or deemed to begin on or
4 after January 1, 2013, and before January 1, 2014, the following brackets
5 and rates are hereby established for the Nebraska individual income tax:
6 Individual Income Tax Brackets and Rates
7 Bracket Single Married, Head of Married, Estates Tax
8 Number Individuals Filing Household Filing and Rate
9 Jointly Separate Trusts
10 1 $0-2,399 $0-4,799 $0-4,499 $0-2,399 $0-499 2.46%
11 2 $2,400- $4,800- $4,500- $2,400- $500-
12 17,499 34,999 27,999 17,499 4,699 3.51%
13 3 $17,500- $35,000- $28,000- $17,500- $4,700-
14 26,999 53,999 39,999 26,999 15,149 5.01%
15 4 $27,000 $54,000 $40,000 $27,000 $15,150
16 and Over and Over and Over and Over and Over 6.84%
17 (2)(a) For taxable years beginning or deemed to begin on or after
18 January 1, 2014, and before January 1, 2025, the following brackets and
19 rates are hereby established for the Nebraska individual income tax:
20 Individual Income Tax Brackets and Rates
21 Bracket Single Married, Head of Married, Estates Tax
22 Number Individuals Filing Household Filing and Rate
23 Jointly Separate Trusts
24 1 $0-2,999 $0-5,999 $0-5,599 $0-2,999 $0-499 2.46%
25 2 $3,000- $6,000- $5,600- $3,000- $500-
26 17,999 35,999 28,799 17,999 4,699 3.51%
27 3 $18,000- $36,000- $28,800- $18,000- $4,700- Rate
28 28,999 57,999 42,999 28,999 15,149 Three
29 4 $29,000 $58,000 $43,000 $29,000 $15,150 Rate
30 and Over and Over and Over and Over and Over Four
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1 (b) For purposes of this subsection, rate three shall be 5.01%. :
2 (i) 5.01% for taxable years beginning or deemed to begin on or after
3 January 1, 2014, and before January 1, 2026;
4 (ii) 4.55% for taxable years beginning or deemed to begin on or
5 after January 1, 2026, and before January 1, 2027; and
6 (iii) 3.99% for taxable years beginning or deemed to begin on or
7 after January 1, 2027.
8 (c) For purposes of this subsection, rate four shall be:
9 (i) 6.84% for taxable years beginning or deemed to begin on or after
10 January 1, 2014, and before January 1, 2023;
11 (ii) 6.64% for taxable years beginning or deemed to begin on or
12 after January 1, 2023, and before January 1, 2024; and
13 (iii) 5.84% for taxable years beginning or deemed to begin on or
14 after January 1, 2024, and before January 1, 2025. ;
15 (iv) 5.20% for taxable years beginning or deemed to begin on or
16 after January 1, 2025, and before January 1, 2026;
17 (v) 4.55% for taxable years beginning or deemed to begin on or after
18 January 1, 2026, and before January 1, 2027; and
19 (vi) 3.99% for taxable years beginning or deemed to begin on or
20 after January 1, 2027.
21 (3)(a) For taxable years beginning or deemed to begin on or after
22 January 1, 2015, and before January 1, 2025, the minimum and maximum
23 dollar amounts for each income tax bracket provided in subsection (2) of
24 this section shall be adjusted for inflation by the percentage determined
25 under subdivision (3)(b) of this section. The rate applicable to any such
26 income tax bracket shall not be changed as part of any adjustment under
27 this subsection. The minimum and maximum dollar amounts for each income
28 tax bracket as adjusted shall be rounded to the nearest ten-dollar
29 amount. If the adjusted amount for any income tax bracket ends in a five,
30 it shall be rounded up to the nearest ten-dollar amount.
31 (b)(i) For taxable years beginning or deemed to begin on or after
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1 January 1, 2015, and before January 1, 2018, the Tax Commissioner shall
2 adjust the income tax brackets by the percentage determined pursuant to
3 the provisions of section 1(f) of the Internal Revenue Code of 1986, as
4 it existed prior to December 22, 2017, except that in section 1(f)(3)(B)
5 of the code the year 2013 shall be substituted for the year 1992. For
6 2015, the Tax Commissioner shall then determine the percent change from
7 the twelve months ending on August 31, 2013, to the twelve months ending
8 on August 31, 2014, and in each subsequent year, from the twelve months
9 ending on August 31, 2013, to the twelve months ending on August 31 of
10 the year preceding the taxable year. The Tax Commissioner shall prescribe
11 new tax rate schedules that apply in lieu of the schedules set forth in
12 subsection (2) of this section.
13 (ii) For taxable years beginning or deemed to begin on or after
14 January 1, 2018, and before January 1, 2025, the Tax Commissioner shall
15 adjust the income tax brackets based on the percentage change in the
16 Consumer Price Index for All Urban Consumers published by the federal
17 Bureau of Labor Statistics from the twelve months ending on August 31,
18 2016, to the twelve months ending on August 31 of the year preceding the
19 taxable year. The Tax Commissioner shall prescribe new tax rate schedules
20 that apply in lieu of the schedules set forth in subsection (2) of this
21 section.
22 (4)(a) For taxable years beginning or deemed to begin on or after
23 January 1, 2025, the following brackets and rates are hereby established
24 for the Nebraska individual income tax:
25 Individual Income Tax Brackets and Rates
26 Bracket Single Married, Head of Married, Estates Tax
27 Number Individuals Filing Household Filing and Rate
28 Jointly Separate Trusts
29 1 $0-2,999 $0-5,599 $0-5,999 $0-2,999 $0-499 Rate 1
30 2 $3,000- $6,000- $5,600- $3,000- $500- Rate 2
31 17,999 35,999 28,799 17,999 4,699
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1 3 $18,000- $36,000- $28,800- $18,000- $4,700- Rate 3
2 28,999 57,999 42,999 28,999 15,149
3 4 $29,000- $58,000- $43,000- $29,000- $15,150- Rate 4
4 249,999 499,999 499,999 249,999 249,999
5 5 $250,000 $500,000 $500,000 $250,000 $250,000 Rate 5
6 and Over and Over and Over and Over and Over
7 (b) For purposes of this subsection:
8 (i) Rate 1 shall be 2.46%;
9 (ii) Rate 2 shall be 3.51%;
10 (iii) Rate 3 shall be:
11 (A) 5.01% for taxable years beginning or deemed to begin on or after
12 January 1, 2025, and before January 1, 2026;
13 (B) 4.55% for taxable years beginning or deemed to begin on or after
14 January 1, 2026, and before January 1, 2027; and
15 (C) 3.99% for taxable years beginning or deemed to begin on or after
16 January 1, 2027;
17 (iv) Rate 4 shall be:
18 (A) 5.20% for taxable years beginning or deemed to begin on or after
19 January 1, 2025, and before January 1, 2026;
20 (B) 4.55% for taxable years beginning or deemed to begin on or after
21 January 1, 2026, and before January 1, 2027; and
22 (C) 3.99% for taxable years beginning or deemed to begin on or after
23 January 1, 2027; and
24 (v) Rate 5 shall be 9.00%.
25 (5)(a) For taxable years beginning or deemed to begin on or after
26 January 1, 2026, the minimum and maximum dollar amounts for each income
27 tax bracket provided in subsection (4) of this section shall be adjusted
28 for inflation by the percentage determined under subdivision (5)(b) of
29 this section. The rate applicable to any such income tax bracket shall
30 not be changed as part of any adjustment under this subsection. The
31 minimum and maximum dollar amounts for each income tax bracket as
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1 adjusted shall be rounded to the nearest ten-dollar amount. If the
2 adjusted amount for any income tax bracket ends in a five, it shall be
3 rounded up to the nearest ten-dollar amount.
4 (b) The Tax Commissioner shall adjust the income tax brackets based
5 on the percentage change in the Consumer Price Index for All Urban
6 Consumers published by the federal Bureau of Labor Statistics from the
7 twelve months ending on August 31, 2024, to the twelve months ending on
8 August 31 of the year preceding the taxable year.
9 (6) (4) Whenever the tax brackets or tax rates change pursuant to
10 this section are changed by the Legislature, the Tax Commissioner shall
11 update the tax rate schedules to reflect the new tax brackets or tax
12 rates and shall publish such updated schedules.
13 (7) (5) The Tax Commissioner shall prepare, from the rate schedules,
14 tax tables which can be used by a majority of the taxpayers to determine
15 their Nebraska tax liability. The design of the tax tables shall be
16 determined by the Tax Commissioner. The size of the tax table brackets
17 may change as the level of income changes. The difference in tax between
18 two tax table brackets shall not exceed fifteen dollars. The Tax
19 Commissioner may build the personal exemption credit and standard
20 deduction amounts into the tax tables.
21 (8) (6) For taxable years beginning or deemed to begin on or after
22 January 1, 2013, the tax rate applied to other federal taxes included in
23 the computation of the Nebraska individual income tax shall be 29.6
24 percent.
25 (9) (7) The Tax Commissioner may require by rule and regulation that
26 all taxpayers shall use the tax tables if their income is less than the
27 maximum income included in the tax tables.
28 Sec. 2. Section 77-2716, Revised Statutes Supplement, 2023, as
29 amended by Laws 2024, LB937, section 75, Laws 2024, LB1023, section 10,
30 Laws 2024, LB1317, section 85, and Laws 2024, LB1394, section 1, is
31 amended to read:
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1 77-2716 (1) The following adjustments to federal adjusted gross
2 income or, for corporations and fiduciaries, federal taxable income shall
3 be made for interest or dividends received:
4 (a)(i) There shall be subtracted interest or dividends received by
5 the owner of obligations of the United States and its territories and
6 possessions or of any authority, commission, or instrumentality of the
7 United States to the extent includable in gross income for federal income
8 tax purposes but exempt from state income taxes under the laws of the
9 United States; and
10 (ii) There shall be subtracted interest received by the owner of
11 obligations of the State of Nebraska or its political subdivisions or
12 authorities which are Build America Bonds to the extent includable in
13 gross income for federal income tax purposes;
14 (b) There shall be subtracted that portion of the total dividends
15 and other income received from a regulated investment company which is
16 attributable to obligations described in subdivision (a) of this
17 subsection as reported to the recipient by the regulated investment
18 company;
19 (c) There shall be added interest or dividends received by the owner
20 of obligations of the District of Columbia, other states of the United
21 States, or their political subdivisions, authorities, commissions, or
22 instrumentalities to the extent excluded in the computation of gross
23 income for federal income tax purposes except that such interest or
24 dividends shall not be added if received by a corporation which is a
25 regulated investment company;
26 (d) There shall be added that portion of the total dividends and
27 other income received from a regulated investment company which is
28 attributable to obligations described in subdivision (c) of this
29 subsection and excluded for federal income tax purposes as reported to
30 the recipient by the regulated investment company; and
31 (e)(i) Any amount subtracted under this subsection shall be reduced
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1 by any interest on indebtedness incurred to carry the obligations or
2 securities described in this subsection or the investment in the
3 regulated investment company and by any expenses incurred in the
4 production of interest or dividend income described in this subsection to
5 the extent that such expenses, including amortizable bond premiums, are
6 deductible in determining federal taxable income.
7 (ii) Any amount added under this subsection shall be reduced by any
8 expenses incurred in the production of such income to the extent
9 disallowed in the computation of federal taxable income.
10 (2) There shall be allowed a net operating loss derived from or
11 connected with Nebraska sources computed under rules and regulations
12 adopted and promulgated by the Tax Commissioner consistent, to the extent
13 possible under the Nebraska Revenue Act of 1967, with the laws of the
14 United States. For a resident individual, estate, or trust, the net
15 operating loss computed on the federal income tax return shall be
16 adjusted by the modifications contained in this section. For a
17 nonresident individual, estate, or trust or for a partial-year resident
18 individual, the net operating loss computed on the federal return shall
19 be adjusted by the modifications contained in this section and any
20 carryovers or carrybacks shall be limited to the portion of the loss
21 derived from or connected with Nebraska sources.
22 (3) There shall be subtracted from federal adjusted gross income for
23 all taxable years beginning on or after January 1, 1987, the amount of
24 any state income tax refund to the extent such refund was deducted under
25 the Internal Revenue Code, was not allowed in the computation of the tax
26 due under the Nebraska Revenue Act of 1967, and is included in federal
27 adjusted gross income.
28 (4) Federal adjusted gross income, or, for a fiduciary, federal
29 taxable income shall be modified to exclude the portion of the income or
30 loss received from a small business corporation with an election in
31 effect under subchapter S of the Internal Revenue Code or from a limited
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