Individual Income Tax Rate Change
The highest rate for the Nebraska individual income tax is reduced to 5.84%.
What's new for credits?
School Readiness Tax Credit
The School Readiness Tax Credit Act restored both a nonrefundable and refundable income tax credit with updated tax credit amounts. Eligible childcare and education providers, staff members, or self employed individuals of an eligible program must first apply to the Nebraska Department of Revenue for the taxpayer to receive certification of the tax credit.
Opportunity Scholarships
Beginning with tax year 2024 and until October 31, 2024, individuals and entities that made cash contributions to a certified scholarship-granting organization may qualify for a nonrefundable tax credit. Taxpayers must have notified the Scholarship-granting organization of their intent to make a contribution and the amount to be claimed as a credit.
Child Care Tax Credit
Parents or legal guardians of children 5 years old or younger, may apply for a refundable tax credit if certain conditions are met.
Nebraska Biodiesel Tax Credit
Retail dealers of biodiesel may be eligible for a refundable tax credit. The tax credit equals 14 cents multiplied by the total number of gallons of biodiesel sold on a retail basis during the prior year through a motor fuel pump located at the retailer dealer's motor fuel site. The credit is calculated only on the biodiesel portion of any product sold by the retail dealer that is a blend of biodiesel, diesel, or other fuel. The tax credit may be used against any Nebraska income tax.
To receive the credit, a retail dealer must file a Biodiesel Tax Credit Application (Form BDTC-A) from January 1st to April 15th of each tax year.
Creating High Impact Economic Futures (CHIEF)
Effective January 1, 2025, the Community Development Assistance Act is replaced by the CHIEF Act. Individuals and entities that contribute to Community Betterment organization programs or projects certified for tax credit status by the Nebraska Department of Economic Development during a tax year are eligible for the nonrefundable credit. The contributions must be made after January 1, 2025.
School District Property Tax Credit
LB 34 enacted in the 2024 special session created the School District Property Tax Relief Act. This act provides property tax relief for school district taxes directly on the property tax statement reducing property taxes before they are paid.
For tax years beginning on or after January 1, 2024, the Form PTC will only be used to claim a credit for community college property taxes paid.
Reverse Osmosis System Tax Credit
A one time refundable income tax credit for the cost of the installation of a reverse osmosis system at a primary residence of a taxpayer. The credit equals 50% of the cost incurred during the tax year, up to a maximum credit of $1,000.
What's new for deductions?
Medical Debt Relief
Effective July 19, 2024, the Medical Debt Relief Act establishes a medical debt relief program for Nebraska residents with low household income unable to pay their medical debt. The program is administered through the Nebraska State Treasurer. The Nebraska State Treasurer will contract with a medical debt relief coordinator to negotiate for and elect to buy dischargeable medical debt from health care providers for accounts described in the Act.
Contributions made under this Act to the Nebraska State Treasurer qualify for a decreasing adjustment to the taxpayers federal adjusted gross income to the extent included in the federal gross income.
For taxpayers who had medical debt discharged under the program, the Act provides a decreasing adjustment from the federal adjusted gross income for the interest and principal balance of the discharged medical debt, to the extent included in the federal adjusted gross income.
Federal Civil Service Retirement Exclusion
For taxable years beginning on or after January 1, 2024, LB 1317 limits the decreasing adjustment from federal adjusted gross income for amounts received as annuities under the Civil Service Retirement System that were earned from employment with the federal government, to the extent included in the federal adjusted gross income.
Note: The decreasing adjustment does not apply to annuities received under the Federal Employees Retirement System.