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LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 69
Introduced by Day, 49.
Read first time January 07, 2021
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 77-2715.07, 77-2717, and 77-2734.03, Revised Statutes Cumulative
3 Supplement, 2020; to adopt the Student Loan Repayment Tax Credit
4 Act; to harmonize provisions; and to repeal the original sections.
5 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 6 of this act shall be known and may be
2 cited as the Student Loan Repayment Tax Credit Act.
3 Sec. 2. For purposes of the Student Loan Repayment Tax Credit Act:
4 (1) Department means the Department of Revenue;
5 (2) Employer means any individual, partnership, limited liability
6 partnership, limited liability company, association, corporation,
7 business trust, legal representative, or other business entity that (a)
8 employs one or more qualified employees in this state, (b) is subject to
9 income tax under the Nebraska Revenue Act of 1967, and (c) is physically
10 located in this state;
11 (3) Postsecondary educational institution means a two-year or four-
12 year college or university which is a member institution of an
13 accrediting body recognized by the United States Department of Education;
14 (4) Qualified employee means an individual who:
15 (a) Is employed by the employer for at least four hundred eighty
16 hours in this state during the taxable year;
17 (b) Graduated or earned a certification from a postsecondary
18 educational institution; and
19 (c) Incurred a student loan while attending a postsecondary
20 educational institution; and
21 (5) Student loan means a loan to a student for postsecondary
22 education expenses that is made, insured, or guaranteed under the federal
23 Higher Education Act of 1965 or the federal Public Health Service Act.
24 Sec. 3. (1) Beginning January 1, 2022, any employer that plans to
25 repay student loan principal and interest directly to the relevant lender
26 or servicer of the loan on behalf of a qualified employee of such
27 employer may apply to the department to receive a tax credit for such
28 student loan repayment.
29 (2) The amount of the credit shall be equal to fifty percent of the
30 employer's student loan repayment, up to a maximum credit of one thousand
31 eight hundred dollars for each qualified employee for whom student loan
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1 repayments are made in any taxable year. An employer may earn such
2 credits for up to twenty qualified employees per taxable year.
3 (3) The credit allowed under this section shall be a nonrefundable
4 credit against the income tax imposed by the Nebraska Revenue Act of
5 1967. Such credit shall be available for taxable years beginning or
6 deemed to begin on or after January 1, 2022, under the Internal Revenue
7 Code of 1986, as amended.
8 (4) Applications for the credit shall be submitted to the
9 department, on a form prescribed by the department, and shall contain the
10 following information:
11 (a) The name and address of the employer;
12 (b) The total number of employees of the employer;
13 (c) The number of qualified employees for whom student loan
14 repayments will be made in the taxable year for which a credit is sought;
15 (d) The amount of the student loan repayment anticipated to be made
16 for each such qualified employee;
17 (e) The total amount of credits sought under this section for such
18 taxable year; and
19 (f) Any other documentation required by the department.
20 (5) If the department determines that the employer qualifies for tax
21 credits under this section, the department shall (a) approve the
22 application, (b) authorize tentative tax credits to the employer within
23 the limits set forth in subsection (6) of this section, and (c) certify
24 the amount of tentative tax credits approved to the employer.
25 (6) The department shall consider applications in the order in which
26 they are received and may approve up to one million five hundred thousand
27 dollars in tax credits under this section in any calendar year. At least
28 twenty-five percent of the credits approved in any calendar year must go
29 to employers that have no more than thirty employees or that are located
30 in a city of the first class, a city of the second class, or a village in
31 this state.
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1 Sec. 4. (1) An employer with an approved application under section
2 3 of this act shall be entitled to claim tax credits to the extent the
3 employer actually makes the student loan repayments contemplated in the
4 application, but in no case shall an employer claim more credits than the
5 amount of tentative tax credits approved by the department under section
6 3 of this act.
7 (2) The employer shall claim the credits by filing a form developed
8 by the Tax Commissioner and attaching the tentative tax credit
9 certification received from the department under section 3 of this act.
10 (3) Tax credits shall not be used to reduce the tax liability of the
11 employer to less than zero. Any tax credit claimed but not used in a
12 taxable year may be carried forward.
13 Sec. 5. (1) On or before July 1, 2023, and on or before July 1 of
14 each year thereafter, the department shall submit a report to the
15 Governor and shall electronically submit a report to the Legislature on
16 the Student Loan Repayment Tax Credit Act. The report shall include the
17 following:
18 (a) The total number of employers receiving tax credits under the
19 act;
20 (b) The total amount of student loan repayments made on behalf of
21 qualified employees;
22 (c) The total amount of tax credits claimed by employers under the
23 act;
24 (d) The total number of qualified employees for whom student loan
25 repayments have been made; and
26 (e) Of the total amount of qualified employees reported under
27 subdivision (1)(d) of this section, the number of such employees who, as
28 of the most recently completed taxable year, pay income taxes to the
29 State of Nebraska.
30 (2) The department may request information from employers as
31 necessary to fulfill the requirements of this section.
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1 Sec. 6. The department may adopt and promulgate rules and
2 regulations to carry out the Student Loan Repayment Tax Credit Act.
3 Sec. 7. Section 77-2715.07, Revised Statutes Cumulative Supplement,
4 2020, is amended to read:
5 77-2715.07 (1) There shall be allowed to qualified resident
6 individuals as a nonrefundable credit against the income tax imposed by
7 the Nebraska Revenue Act of 1967:
8 (a) A credit equal to the federal credit allowed under section 22 of
9 the Internal Revenue Code; and
10 (b) A credit for taxes paid to another state as provided in section
11 77-2730.
12 (2) There shall be allowed to qualified resident individuals against
13 the income tax imposed by the Nebraska Revenue Act of 1967:
14 (a) For returns filed reporting federal adjusted gross incomes of
15 greater than twenty-nine thousand dollars, a nonrefundable credit equal
16 to twenty-five percent of the federal credit allowed under section 21 of
17 the Internal Revenue Code of 1986, as amended, except that for taxable
18 years beginning or deemed to begin on or after January 1, 2015, such
19 nonrefundable credit shall be allowed only if the individual would have
20 received the federal credit allowed under section 21 of the code after
21 adding back in any carryforward of a net operating loss that was deducted
22 pursuant to such section in determining eligibility for the federal
23 credit;
24 (b) For returns filed reporting federal adjusted gross income of
25 twenty-nine thousand dollars or less, a refundable credit equal to a
26 percentage of the federal credit allowable under section 21 of the
27 Internal Revenue Code of 1986, as amended, whether or not the federal
28 credit was limited by the federal tax liability. The percentage of the
29 federal credit shall be one hundred percent for incomes not greater than
30 twenty-two thousand dollars, and the percentage shall be reduced by ten
31 percent for each one thousand dollars, or fraction thereof, by which the
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1 reported federal adjusted gross income exceeds twenty-two thousand
2 dollars, except that for taxable years beginning or deemed to begin on or
3 after January 1, 2015, such refundable credit shall be allowed only if
4 the individual would have received the federal credit allowed under
5 section 21 of the code after adding back in any carryforward of a net
6 operating loss that was deducted pursuant to such section in determining
7 eligibility for the federal credit;
8 (c) A refundable credit as provided in section 77-5209.01 for
9 individuals who qualify for an income tax credit as a qualified beginning
10 farmer or livestock producer under the Beginning Farmer Tax Credit Act
11 for all taxable years beginning or deemed to begin on or after January 1,
12 2006, under the Internal Revenue Code of 1986, as amended;
13 (d) A refundable credit for individuals who qualify for an income
14 tax credit under the Angel Investment Tax Credit Act, the Nebraska
15 Advantage Microenterprise Tax Credit Act, the Nebraska Advantage Research
16 and Development Act, or the Volunteer Emergency Responders Incentive Act;
17 and
18 (e) A refundable credit equal to ten percent of the federal credit
19 allowed under section 32 of the Internal Revenue Code of 1986, as
20 amended, except that for taxable years beginning or deemed to begin on or
21 after January 1, 2015, such refundable credit shall be allowed only if
22 the individual would have received the federal credit allowed under
23 section 32 of the code after adding back in any carryforward of a net
24 operating loss that was deducted pursuant to such section in determining
25 eligibility for the federal credit.
26 (3) There shall be allowed to all individuals as a nonrefundable
27 credit against the income tax imposed by the Nebraska Revenue Act of
28 1967:
29 (a) A credit for personal exemptions allowed under section
30 77-2716.01;
31 (b) A credit for contributions to certified community betterment
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1 programs as provided in the Community Development Assistance Act. Each
2 partner, each shareholder of an electing subchapter S corporation, each
3 beneficiary of an estate or trust, or each member of a limited liability
4 company shall report his or her share of the credit in the same manner
5 and proportion as he or she reports the partnership, subchapter S
6 corporation, estate, trust, or limited liability company income;
7 (c) A credit for investment in a biodiesel facility as provided in
8 section 77-27,236;
9 (d) A credit as provided in the New Markets Job Growth Investment
10 Act;
11 (e) A credit as provided in the Nebraska Job Creation and Mainstreet
12 Revitalization Act;
13 (f) A credit to employers as provided in section 77-27,238; and
14 (g) A credit as provided in the Affordable Housing Tax Credit Act;
15 and .
16 (h) A credit as provided in the Student Loan Repayment Tax Credit
17 Act.
18 (4) There shall be allowed as a credit against the income tax
19 imposed by the Nebraska Revenue Act of 1967:
20 (a) A credit to all resident estates and trusts for taxes paid to
21 another state as provided in section 77-2730;
22 (b) A credit to all estates and trusts for contributions to
23 certified community betterment programs as provided in the Community
24 Development Assistance Act; and
25 (c) A refundable credit for individuals who qualify for an income
26 tax credit as an owner of agricultural assets under the Beginning Farmer
27 Tax Credit Act for all taxable years beginning or deemed to begin on or
28 after January 1, 2009, under the Internal Revenue Code of 1986, as
29 amended. The credit allowed for each partner, shareholder, member, or
30 beneficiary of a partnership, corporation, limited liability company, or
31 estate or trust qualifying for an income tax credit as an owner of
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1 agricultural assets under the Beginning Farmer Tax Credit Act shall be
2 equal to the partner's, shareholder's, member's, or beneficiary's portion
3 of the amount of tax credit distributed pursuant to subsection (6) of
4 section 77-5211.
5 (5)(a) For all taxable years beginning on or after January 1, 2007,
6 and before January 1, 2009, under the Internal Revenue Code of 1986, as
7 amended, there shall be allowed to each partner, shareholder, member, or
8 beneficiary of a partnership, subchapter S corporation, limited liability
9 company, or estate or trust a nonrefundable credit against the income tax
10 imposed by the Nebraska Revenue Act of 1967 equal to fifty percent of the
11 partner's, shareholder's, member's, or beneficiary's portion of the
12 amount of franchise tax paid to the state under sections 77-3801 to
13 77-3807 by a financial institution.
14 (b) For all taxable years beginning on or after January 1, 2009,
15 under the Internal Revenue Code of 1986, as amended, there shall be
16 allowed to each partner, shareholder, member, or beneficiary of a
17 partnership, subchapter S corporation, limited liability company, or
18 estate or trust a nonrefundable credit against the income tax imposed by
19 the Nebraska Revenue Act of 1967 equal to the partner's, shareholder's,
20 member's, or beneficiary's portion of the amount of franchise tax paid to
21 the state under sections 77-3801 to 77-3807 by a financial institution.
22 (c) Each partner, shareholder, member, or beneficiary shall report
23 his or her share of the credit in the same manner and proportion as he or
24 she reports the partnership, subchapter S corporation, limited liability
25 company, or estate or trust income. If any partner, shareholder, member,
26 or beneficiary cannot fully utilize the credit for that year, the credit
27 may not be carried forward or back.
28 (6) There shall be allowed to all individuals nonrefundable credits
29 against the income tax imposed by the Nebraska Revenue Act of 1967 as
30 provided in section 77-3604 and refundable credits against the income tax
31 imposed by the Nebraska Revenue Act of 1967 as provided in section
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1 77-3605.
2 (7)(a) For taxable years beginning or deemed to begin on or after
3 January 1, 2020, and before January 1, 2026, under the Internal Revenue
4 Code of 1986, as amended, a nonrefundable credit against the income tax
5 imposed by the Nebraska R