LB1107: Nebraska’s temporary property tax relief bill, with a caveat

In August, Governor Pete Ricketts signed LB 1107 into law, which provided property tax relief for many taxpayers, with a caveat for business personal property. Although there are many aspects to this bill, here are some highlights pertaining to property taxes:

Since 2007, the Property Tax Credit Cash Fund has provided a credit on taxpayer’s real property bill, varying each year depending on the Property Tax Credit Cash Fund balance and the taxpayer’s relative value to the total real estate value in the state . In 2019, $275 million was budgeted for the fund, to be allocated across the state. LB1107 establishes a minimum annual $275 million each year to be credited and provides for additional revenues to fund the Property Tax Credit Cash Fund.

LB1107 also creates the new Nebraska Property Tax Incentive Act. This is a refundable income tax credit for school property taxes paid, subject to a state-wide cap.

For business personal property, LB1107 increases a company’s liability and compliance costs. The bill repealed the state’s de minimis business personal property tax exemption. Under current law, companies may exclude from tax liability the first $10,000 of tangible personal property. Small businesses that were under this exemption will now need to file a business personal property tax return starting in 2021 and will incur personal property taxes as a result of the loss of the de minimis exemption.

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