Nebraska proposes refundable tax credits for low-income individuals and beginning farmers

The Nebraska State Legislature introduced Legislature Bill 439 on January 23, 2025, aiming to reform the state's income tax credit system. The bill primarily seeks to enhance financial support for low-income individuals and specific groups, including beginning farmers, livestock producers, and investors in designated tax credit programs.

Key provisions of the bill include a refundable tax credit structure that adjusts based on federal adjusted gross income. For individuals earning up to $22,000, the bill proposes a full 100% credit, which decreases by 10% for every additional $1,000 earned. This tiered approach is designed to provide relief to lower-income residents while gradually phasing out benefits for higher earners.

Additionally, the bill outlines refundable credits for individuals qualifying under various tax credit acts, such as the Beginning Farmer Tax Credit Act and the Angel Investment Tax Credit Act. Notably, the bill stipulates that eligibility for these credits is contingent upon having received corresponding federal credits, with specific adjustments for net operating losses.

Debate surrounding LB439 has highlighted concerns about its fiscal implications. Critics argue that the bill could strain state revenue, while supporters contend that it is essential for fostering economic growth and supporting vulnerable populations. Amendments have been proposed to address these concerns, but the bill's core intent remains focused on providing targeted tax relief.

The significance of LB439 lies in its potential to reshape Nebraska's tax landscape, particularly for low-income families and specific sectors of the economy. Experts suggest that if passed, the bill could stimulate local economies by increasing disposable income for eligible residents and encouraging investment in agriculture and small businesses.

As the legislative session progresses, lawmakers will continue to discuss the bill's provisions, with further amendments likely as they seek to balance fiscal responsibility with the need for economic support. The outcome of LB439 could have lasting effects on Nebraska's tax policy and its residents' financial well-being.