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LEGISLATIVE BILL 753
Approved by the Governor May 30, 2023
Introduced by Linehan, 39; Aguilar, 35; Albrecht, 17; Armendariz, 18; Ballard,
21; Brewer, 43; Briese, 41; Clements, 2; DeKay, 40; Dover, 19;
Erdman, 47; Geist, 25; Halloran, 33; Hansen, B., 16; Hardin, 48;
Holdcroft, 36; Hughes, 24; Ibach, 44; Jacobson, 42; Kauth, 31;
Lippincott, 34; Lowe, 37; McDonnell, 5; McKinney, 11; Moser, 22;
Murman, 38; Riepe, 12; Sanders, 45; Slama, 1; von Gillern, 4;
Wayne, 13; Bosn, 25; at the request of the Governor.
A BILL FOR AN ACT relating to revenue and taxation; to amend sections
77-2715.07, 77-2717, and 77-2734.03, Revised Statutes Cumulative Supplement, 2022; to adopt the Opportunity Scholarships Act; to provide for tax credits; to harmonize provisions; to provide an operative date; to provide for severability; and to repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Sections 1 to 13 of this act shall be known and may be cited as the Opportunity Scholarships Act.
Sec. 2. The Legislature finds that:
(1) Enabling the greatest number of parents and legal guardians to choose among quality educational opportunities for children will improve the quality of education available to all children;
(2) Privately operated elementary and secondary schools in Nebraska satisfy the state's requirements for legal operation and provide quality educational opportunities for children;
(3) Parents and legal guardians of limited means are less able to choose among quality educational opportunities for their children;
(4) Making it possible for more parents and legal guardians to be able to
choose privately operated schools benefits Nebraska parents and taxpayers; and
(5) It is in the best interests of the State of Nebraska and its citizens to encourage individuals and businesses to support organizations that financially assist parents and legal guardians who want to enroll their children in privately operated elementary and secondary schools, and such encouragement can be accomplished through the use of tax credits.
Sec. 3. For purposes of the Opportunity Scholarships Act:
(1) Department means the Department of Revenue;
(2) Education scholarship means a financial grant-in-aid to be used to pay all or part of the tuition and fees for attending a qualified school and includes any tuition grants;
(3) Eligible student means a resident of Nebraska who:
(a) Is receiving an education scholarship for the first time and is (i)
entering kindergarten or ninth grade in a qualified school or (ii) transferring from a public school at which the student was enrolled for at least one semester immediately preceding the first semester for which the student receives an education scholarship to a qualified school and is entering any of
grades kindergarten through twelve;
(b) Has previously received an education scholarship and is continuing education at a qualified school until such student graduates from high school or reaches twenty-one years of age, whichever comes first; or
(c) Is the sibling of a student who is receiving an education scholarship and resides in the same household as such student;
(4) Qualified school means any nongovernmental, privately operated elementary or secondary school located in this state that (a) is operated not for profit, (b) complies with the antidiscrimination provisions of 42 U.S.C.
1981 as such section existed on January 1, 2023, (c) complies with all health and life safety laws or codes that apply to privately operated schools, and (d)
fulfills the applicable accreditation or approval requirements established by
the State Board of Education pursuant to section 79-318;
(5) Scholarship-granting organization means a charitable organization in
this state that is (a) exempt from federal income taxation pursuant to section
501(c)(3) of the Internal Revenue Code of 1986, as amended, and (b) certified pursuant to section 4 of this act to provide tax-credit-supported education scholarships to eligible students to assist them in attending qualified schools; and
(6) Tuition means any amount charged by a qualified school for enrollment in its instructional program. Tuition shall not exceed the full cost of
educating an eligible student at such qualified school.
Sec. 4. (1) An organization may apply to the department to become certified as a scholarship-granting organization under the Opportunity Scholarships Act. An organization shall obtain such certification prior to
providing any education scholarships to eligible students under the act. The applicant shall provide the department with sufficient information to show:
(a) That the applicant is exempt from federal income taxation under section 501(c)(3) of the Internal Revenue Code of 1986, as amended;
(b) That the applicant will offer one or more education scholarship programs for eligible students;
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(c) That the applicant will be able to comply with the requirements of
section 10 of this act;
(d) That the applicant will provide education scholarships for eligible students without limiting education scholarship availability to only one qualified school;
(e) That the applicant will:
(i) Give first priority to:
(A) Eligible students who received an education scholarship from a scholarship-granting organization during the previous school year; and
(B) The sibling of a student who is receiving an education scholarship, so long as the sibling resides in the same household as such student;
(ii) Give second priority to:
(A) Eligible students whose household income levels do not exceed one hundred percent of the federal poverty level;
(B) Eligible students whose application for the enrollment option program established in section 79-234 has been denied;
(C) Eligible students who have an individualized education plan;
(D) Eligible students who are experiencing bullying, harassment, hazing,
assault, battery, kidnapping, robbery, sexual offenses, threat or intimidation,
or fighting at school;
(E) Eligible students who are in foster care; and
(F) Eligible students who are in a family with a parent or guardian actively serving in a branch of the armed forces of the United States or in the National Guard, or whose parent or guardian was killed serving in the line of
duty;
(iii) Give third priority to eligible students whose household income levels exceed one hundred percent of the federal poverty level but do not exceed one hundred eighty-five percent of the federal poverty level;
(iv) Give fourth priority to eligible students whose household income levels exceed one hundred eighty-five percent of the federal poverty level but do not exceed two hundred thirteen percent of the federal poverty level; and
(v) Give fifth priority to eligible students whose household income levels exceed two hundred thirteen percent of the federal poverty level but do not exceed three hundred percent of the income indicated in the income eligibility guidelines for reduced price meals under the National School Lunch Program in 7
C.F.R. part 210;
(f) That the applicant will limit the maximum scholarship amount awarded to any student to the cost of tuition and fees at the qualified school such student attends; and
(g) That the applicant will limit scholarship amounts awarded to students in a manner that assures that the average of the scholarship amounts awarded per student does not exceed seventy-five percent of the statewide average general fund operating expenditures per formula student for the most recently available complete data year as such terms are defined in section 79-1003.
(2) If the applicant meets the requirements of this section, the department shall certify it as a scholarship-granting organization for tax-
credit purposes under the Opportunity Scholarships Act. Such certification is
subject to revocation by the department if the scholarship-granting organization subsequently fails to fulfill the requirements of this section or
section 10 of this act.
Sec. 5. (1) An individual taxpayer who makes one or more cash contributions to one or more scholarship-granting organizations during a tax year shall be eligible for a credit against the income tax due under the Nebraska Revenue Act of 1967. Except as otherwise provided in the Opportunity Scholarships Act, the amount of the credit shall be equal to whichever of the following amounts is the lowest: (a) The total amount of such contributions made during the tax year; (b) fifty percent of the income tax liability of such taxpayer for the tax year; or (c) one hundred thousand dollars. A taxpayer may only claim a credit pursuant to this section for the portion of the contribution that was not claimed as a charitable contribution under the Internal Revenue Code.
(2) Taxpayers who are married but file separate returns for a tax year in
which they could have filed a joint return may each claim only one-half of the tax credit that would otherwise have been allowed for a joint return.
(3) The tax credit allowed under this section shall be a nonrefundable credit. Any amount of the credit that is unused may be carried forward and applied against the taxpayer's income tax liability for the next five years immediately following the tax year in which the credit is first allowed. The tax credit cannot be carried back.
(4) The taxpayer may not designate all or any part of the contribution to
a scholarship-granting organization for the benefit of any eligible student specifically identified by the taxpayer.
(5) The tax credit allowed under this section is subject to section 9 of this act.
Sec. 6. (1) Any partnership, limited liability company, or corporation having an election in effect under subchapter S of the Internal Revenue Code of
1986, as amended, that is carrying on any trade or business for which deductions would be allowed under section 162 of the Internal Revenue Code of
1986, as amended, or is carrying on any rental activity and that makes one or
more cash contributions to one or more scholarship-granting organizations during a tax year shall be eligible for a credit against the income tax due under the Nebraska Revenue Act of 1967. Except as otherwise provided in the Opportunity Scholarships Act, the amount of the credit shall be equal to
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whichever of the following amounts is the lowest: (a) The total amount of such contributions made during the tax year; (b) fifty percent of the income tax liability of such taxpayer for the tax year; or (c) one hundred thousand dollars. A taxpayer may only claim a credit pursuant to this section for the portion of the contribution that was not claimed as a charitable contribution under the Internal Revenue Code. The credit shall be attributed to each partner, member, or shareholder in the same proportion used to report the partnership's, limited liability company's, or subchapter S corporation's income or loss for income tax purposes.
(2) The tax credit allowed under this section shall be a nonrefundable credit. Any amount of the tax credit that is unused may be carried forward and applied against the taxpayer's income tax liability for the next five years immediately following the tax year in which the credit is first allowed. The tax credit cannot be carried back.
(3) The taxpayer may not designate all or any part of the contribution to
a scholarship-granting organization for the benefit of any eligible student specifically identified by the taxpayer.
(4) The tax credit allowed under this section is subject to section 9 of this act.
Sec. 7. (1) An estate or trust which makes one or more cash contributions to one or more scholarship-granting organizations during a tax year shall be
eligible for a credit against the income tax due under the Nebraska Revenue Act of 1967. Except as otherwise provided in the Opportunity Scholarships Act, the amount of the credit shall be equal to whichever of the following amounts is
the lowest: (a) The total amount of such contributions made during the tax year; (b) fifty percent of the income tax liability of such taxpayer for the tax year; or (c) one million dollars. A taxpayer may only claim a credit pursuant to this section for the portion of the contribution that was not claimed as a charitable contribution under the Internal Revenue Code. Any credit not used by the estate or trust may be attributed to each beneficiary of
the estate or trust in the same proportion used to report the beneficiary's income from the estate or trust for income tax purposes.
(2) The tax credit allowed under this section shall be a nonrefundable credit. Any amount of the tax credit that is unused may be carried forward and applied against the taxpayer's income tax liability for the next five years immediately following the tax year in which the credit is first allowed. The tax credit cannot be carried back.
(3) The taxpayer may not designate all or any part of the contribution to
a scholarship-granting organization for the benefit of any eligible student specifically identified by the taxpayer.
(4) The tax credit allowed under this section is subject to section 9 of this act.
Sec. 8. (1) A corporate taxpayer as defined in section 77-2734.04 which makes one or more cash contributions to one or more scholarship-granting organizations during a tax year shall be eligible for a credit against the income tax due under the Nebraska Revenue Act of 1967. Except as otherwise provided in the Opportunity Scholarships Act, the amount of the credit shall be
equal to whichever of the following amounts is the lowest: (a) The total amount of such contributions made during the tax year; (b) fifty percent of the income tax liability of such taxpayer for the tax year; or (c) one hundred thousand dollars. A taxpayer may only claim a credit pursuant to this section for the portion of the contribution that was not claimed as a charitable contribution under the Internal Revenue Code.
(2) The tax credit allowed under this section shall be a nonrefundable credit. Any amount of the tax credit that is unused may be carried forward and applied against the taxpayer's income tax liability for the next five years immediately following the tax year in which the credit is first allowed. The tax credit cannot be carried back.
(3) The taxpayer may not designate all or any part of the contribution to
a scholarship-granting organization for the benefit of any eligible student specifically identified by the taxpayer.
(4) The tax credit allowed under this section is subject to section 9 of this act.
Sec. 9. (1) Prior to making a contribution to a scholarship-granting organization, any taxpayer desiring to claim a tax credit under the Opportunity Scholarships Act shall notify the scholarship-granting organization of the taxpayer's intent to make a contribution and the amount to be claimed as a tax credit. Upon receiving each such notification, the scholarship-granting organization shall notify the department of the intended tax credit amount. If the department determines that the intended tax credit amount in the notification would exceed the limit specified in subsection (3) of this section, the department shall notify the scholarship-granting organization of
its determination within thirty days after receipt of the notification. The scholarship-granting organization shall then promptly notify the taxpayer of
the department's determination that the intended tax credit amount in the notification is not available. If an amount less than the amount indicated in
the notification is available for a tax credit, the department shall notify the scholarship-granting organization of the available amount and the scholarship-
granting organization shall notify the taxpayer of the available amount within three business days.
(2) In order to be allowed a tax credit as provided by the act, the taxpayer shall make its contribution between thirty-one and sixty days after notifying the scholarship-granting organization of the taxpayer's intent to
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make a contribution. If the scholarship-granting organization does not receive the contribution within the required time period, it shall notify the department of such fact and the department shall no longer include such amount when calculating whether the limit prescribed in subsection (3) of this section has been exceeded. If the scholarship-granting organization receives the contribution within the required time period, it shall provide the taxpayer with a receipt for the contribution. The receipt shall show the name and address of the scholarship-granting organization, the date the scholarship-
granting organization was certified by the department in accordance with section 4 of this act, the name, address, and, if available, tax identification number of the taxpayer making the contribution, the amount of the contribution,
and the date the contribution was received.
(3) The department shall consider notifications regarding intended tax credit amounts in the order in which they are received to ascertain whether the intended tax credit amounts are within the annual limit provided in this subsection. The annual limit on the total amount of tax credits for calendar years 2024, 2025, and 2026 shall be twenty-five million dollars. The annual limit on the total amount of tax credits for calendar year 2027 and each calendar year thereafter shall be calculated by taking the annual limit from the prior calendar year and then multiplying such amount by (a) one hundred twenty-five percent if the intended tax credit amounts in the prior calendar year exceeded ninety percent of the annual limit applicable to that calendar year or (b) one hundred percent if the intended tax credit amounts in the prior calendar year did not exceed ninety percent of the annual limit applicable to
that calendar year. The annual limit may be increased as provided in this subsection until it reaches one hundred million dollars. Thereafter, no further increases shall be allowed.
(4) The State Department of Education and the Department of Revenue shall publish on their respective websites information identifying t