Date of this Version
Cornhusker Economics, August 26, 2020
The Nebraska Unicameral enacted significant property tax relief legislation in the closing days of the 2020 legislative session. The last-minute compromise was negotiated by seven legislators selected by the Speaker. The compromise estab-lishes a refundable state income tax credit of an estimated 6% of the property taxes paid for local schools (excluding property taxes for school bonds and school budget overrides). Taxpayers will be able to claim this credit on next year’s Ne-braska state income tax return. For fiscal years (FYs) 2021-22 through 2023-24 (i.e. from July 1, 2021, through June 30, 2024), the amount availa-ble for the refundable state income tax credits will be increased from the $125 million base amount if and only if sales and income tax collections ex-ceed projections and have an annual increase of at least 3.5%. For FY 2024-25 the amount available for the refundable state income tax credit will in-crease to $375 million. That could lead to refund-able state income tax credits of as much as 18% of the property taxes paid to local schools.