Nebraska Basic Business Taxes 2011
Nebraska's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include employment and investment tax credits, the Enterprise Zone Act, and energy and fuel conservation tax credits.
Area Development Research Desk (March 2011)
Corporate income tax:
A franchise tax (measured net income) is imposed on corporations engaged in local or intrastate business. The tax rate is 5.58 percent for taxable income up to $100,000. The tax rate is 7.81 percent for taxable income above $100,000.
Corporate unitary tax:
Unitary tax affects multistate and multinational corporations and serves to reflect the relative degree of presence a business has in the state for state income tax purposes. To encourage investment in property and payroll within Nebraska's borders, the unitary tax formula considers sales only. As a result, businesses that have a significant property and payroll presence in Nebraska, as compared to sales attributed to Nebraska, experience a reduction in corporate income taxes.
Sales and use taxes:
A 5.5 percent state sales tax is levied against gross receipts, installation, maintenance, and rentals of tangible personal property, certain utilities, admissions, and certain enumerated services. A 5.5 percent use tax is levied on the purchase, lease, or rental price of property. Municipalities may impose sales and use taxes of 0.5 to 1.5 percent.
Under the Nebraska Advantage Act, a qualified business that creates 30 or more new jobs and invests at least $3 million in business facilities is eligible for a refund of all state and local sales taxes on most capital purchases. A qualified business that invests a lower amount, but still creates at least 10 new jobs and has at least $1 million in new investment, is eligible for a refund of one-half of state and local taxes on qualified property purchases.
Unless expressly exempted, both tangible and real property are subject to taxation. All property is assessed at actual value. There is no state property tax. The tax rate varies among localities.
Under the Nebraska Redevelopment Act, communities can declare land outside their city limits as blighted (up to 10 miles away for the largest cities), and then, through tax increment financing, allow for the increased property taxes generated by the improvement of the blighted property to be used to pay for the redevelopment costs.
If a business invests $10 million in qualified property and hires at least 100 new employees, it can obtain personal property tax exemptions for a 15-year period for turbine-powered aircraft, personal computer systems, agricultural products processing machinery and personal property used in a distribution facility for up to 10 years.
Employment and investment tax credits:
Under the Nebraska Advantage Act, a qualified business that creates 30 or more new jobs and invests at least $3 million in business facilities is eligible for a job creation tax credit of at least three percent when pay is at least 60 percent of Nebraska's average wage and, and up to six percent when pay is 125 percent of Nebraska's average wage, plus a 10 percent investment tax credit on investments in depreciable property at the project for seven consecutive years. These credits may be applied to income tax liability or used to obtain refunds of sales and use taxes. In counties with populations of fewer than 15,000, qualifying businesses can invest as little as $125,000 and create just two full-time jobs and receive the following: $2,750 of refundable credits per $50,000 of qualifying investment and $3,000 of refundable credits per job created.
Enhanced tax credits are available through Nebraska's Enterprise Zone Act to any taxpayer in a qualifying business.
Business inventories are exempt from all property taxation.
Goods in transit:
Goods exported out of state, or delivered to a carrier for shipment out of state, are exempt from sales and use taxes.
Businesses installing certified pollution-control equipment are refunded sales and use taxes paid in connection with purchase and installation.
Industrial machinery and equipment:
Railroad rolling stock, manufacturing and process equipment, barges, and common carrier vehicles are exempt from sales and use taxation.
Industrial fuels and raw materials:
Energy sources, fuels, industrial water, ingredients, component parts, and containers are not subject to state sales tax.
Energy and fuel conservation measures:
A credit against corporate tax is allowed for qualifying alternative energy systems.
Nebraska State Contact:
Nebraska Department of Economic Development
P.O. Box 94666
Lincoln, NE 68509
(402) 471-3111 or (800) 426-6505
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.