Nebraska lawmakers approve tax rate reductions for employers from 2025 to 2029

Nebraska's Legislature Bill 297, introduced on March 17, 2025, aims to provide significant tax relief for employers by reducing the average combined tax rate for unemployment insurance. This bill, which is set to take effect immediately upon passage, proposes a five percent reduction in the average combined tax rate from January 1, 2025, through December 31, 2029.

The primary focus of LB297 is to ease the financial burden on employers by adjusting the tax rate assigned to rate category twelve, which will be set at 0.48 for the tax year 2025. This adjustment is expected to benefit a wide range of businesses across Nebraska, allowing them to allocate more resources towards growth and employee retention during a challenging economic climate.

Key provisions of the bill include the stipulation that employers who fail to file their combined tax reports by October 31 will be assigned to a higher rate category for the following year unless they rectify their delinquency by December 31. Additionally, the bill allows employers to make voluntary contributions to their accounts, which can help them qualify for a lower tax rate category.

While the bill has garnered support for its potential to stimulate economic activity, it has also faced scrutiny. Critics argue that the reduction in tax rates could lead to decreased funding for unemployment benefits, potentially impacting workers during economic downturns. Proponents, however, emphasize the importance of supporting businesses to foster job creation and economic resilience.

The implications of LB297 are significant, as it not only aims to alleviate immediate financial pressures on employers but also seeks to enhance the overall economic landscape of Nebraska. As the bill moves through the legislative process, its outcomes will be closely monitored by both business leaders and workers alike, with the potential to reshape the state's approach to unemployment insurance taxation in the coming years.