Nonpartisan staff outline Nevada's consolidated tax distribution (C tax), first‑tier allocations and recent implementation issues

Michael Nakamoto, chief principal deputy fiscal analyst with the Fiscal Analysis Division of the Legislative Counsel Bureau, told the Senate Committee on Revenue and Economic Development in Carson City that Nevada’s consolidated tax distribution (C tax) is a complex and significant local government revenue source. "Suffice it to say, this is not a simple topic," he said, noting the presentation binder provided to committee members.

Nakamoto said six revenue sources are pooled into the local government tax distribution account (the C tax first tier): the supplemental city‑county relief tax (SCCRT), the basic city‑county relief tax (BCCRT), the governmental services tax (GST), the real property transfer tax (RPTT), the cigarette tax, and the liquor tax. Those proceeds are first allocated to 17 county-level buckets and then distributed within counties through a second-tier process that serves cities, special districts and enterprise districts.

The SCCRT is the largest first‑tier component. Nakamoto said SCCRT accounted for about 67.9% of the first‑tier C tax in FY24. Five counties (Esmeralda, Lander, Lincoln, Mineral and Pershing) receive guaranteed annual distributions set by statute and adjusted annually by a formula tied to inflation or statewide SCCRT growth; the remaining counties receive proportionate shares of the balance. Nakamoto described the statute-driven history for the guaranteed/non‑guaranteed mechanism and noted counties can move between statuses when collections exceed guaranteed amounts by statutory thresholds.

The BCCRT (0.5% statewide sales tax component) is split between in‑state and out‑of‑state sales: in‑state retail sales are attributed to the county where the seller maintains a fixed place of business; out‑of‑state (marketplace) sales are allocated by population. Nakamoto said in FY24 in‑state sales made up about 81.9% of BCCRT while out‑of‑state sales were roughly 18.1% — a near doubling of the out‑of‑state share since FY18 after Wayfair-era changes.

On the governmental services tax (GST), Nakamoto described the calculation: a determined value equal to 35% of the manufacturer’s suggested retail price for a new vehicle, adjusted by a depreciation factor, multiplied by the statutory rate (described in the presentation as 4¢ per dollar of determined value), with proceeds distributed among the State Highway Fund, education accounts, school-district debt accounts and the local government tax distribution account.

For the real property transfer tax, Nakamoto said the county recorder collects the tax on transfers valued at $100 or more; Clark County’s rate is $2.55 per $500 of value, Churchill and Washoe $2.05 per $500, and other counties $1.95 per $500. A 55¢ portion per $500 is allocated to the local government tax distribution account; Nakamoto noted RPTT is volatile and sensitive to interest rates, housing supply and one‑time events.

Nakamoto also described the cigarette tax (a $1.80 stamp per pack of 20 with 10¢ to the local distribution account) and the liquor excise tax (multiple tiers; the local distribution share is small and allocated per capita). He said total first‑tier collections were just over $2.2 billion in FY24, up from about $1.5 billion in FY18.

Committee members asked operational questions. Senator Stone asked whether nicotine liquids for vaping are taxed under the C tax; Nakamoto said those products are taxed under the other‑tobacco‑products tax (a wholesale tax) and proceeds go entirely to the state general fund. The committee discussed the role of REITs and entity structures in RPTT volatility and recent alterations to exemptions; Nakamoto referenced Assembly Bill 448 (last session) that narrowed exemptions where entities are formed solely to evade RPTT.

Nakamoto also warned of short‑term implementation issues tied to Project Mint, the Department of Taxation’s new tax collection system. He said the project’s initial phase caused timing‑related delays in distributions and that the Department of Taxation is working to reconcile and accelerate catch‑up distributions so that collections are accounted for within the fiscal year rather than carried forward.

Nakamoto said the second tier of C tax distributions and formulas will be covered in a follow‑up session; the committee scheduled a second presentation to complete the overview. No formal actions or votes were taken during the briefing.