Tax Incentives - Nebraska Advantage
The Nebraska Advantage Package is Nebraska’s comprehensive economic development incentives that meet the needs of your expanding or relocating business. During the 2012 Legislative session, additional legislation was passed further enhancing Nebraska’s competitive incentives package. LB 1118 creates an additional tier 2 providing additional benefits for large data center projects, in addition to the benefits currently available for other tier 2 projects, for a 10 year personal property tax exemption for those projects. LB 1118 also allows a taxpayer to sign a single agreement for a tier 2 large data center project and sequential tier 5 project.
The Nebraska Advantage Act multi-tiered benefits include:
Tier 1 – $ 1 million new investment and 10 new jobs
Qualifying businesses under this tier are eligible for a refund of ½ of the sales tax paid for qualified capital purchases at the project, the full sliding scale wage credit of 3, 4, 5 or 6% depending on wage level, and a 3% investment tax credit.
Tier 2 – $3 million new investment and 30 new jobs
This tier qualifies for refund of all sales taxes for capital purchases at the project, the sliding scale wage credit and a 10% investment credit. Also includes a personal property tax exemption on computer systems for Internet web portal or data center.
Tier 2 – $200,000,000 new investment and 30 new jobs at data center
This new tier qualifies for refund of all sales and use taxes on project’s tangible personal property from the date of acquisition through the entitlement period, the sliding scale wage credit, and a 10% investment credit. Also includes a personal property tax exemption up to 10 years on all project’s personal property.
Tier 3 – 30 new jobs (no investment)
For the creation of 30 new jobs, the company receives the sliding scale wage credit. No capital investment is required.
Tier 4 - $12 million new investment and 100 new jobs
In addition to the sales tax refund, jobs credit, and the investment credit, qualifying businesses under this tier receive a personal property tax exemption on turbine-powered aircraft, personal computer systems, agricultural product processing machinery and personal property used in a distribution facility for up to 10 years.
Tier 5 – $37 million new investment and must maintain employment
Companies receive a refund of all sales taxes paid on capital purchases with the project. Also includes a personal property tax exemption on computer systems for Internet web portal or data center.
Super Tier 6 –
$10 million new investment and 75 new jobs OR
$109 million new investment and 50 new jobs
Any business activity other than retail qualifies. Refund of all sales tax on projects capital purchases, 10% job credit on new employee “compensation”—wage thresholds per new position are the greater of 200% of the county average wage OR 150% of the Neb. average wage, 15% investment credit, and personal property tax exemption for all personal property at the project for up to 10 years.
DOWNLOAD Tax Incentive Calculators (in .xls format):
- NE Advantage Benefit Calculator (File Updated 02/13/2014)
WAIVER of LIABILITY: Officials representing the Nebraska Department of Economic Development have prepared the enclosed estimates to determine the amount of any benefits that might become available for this project under the Nebraska Advantage tax incentive program. Be advised that these represent projected benefits. The Nebraska Department of Revenue will make a final determination of any tax incentives complimenting this project. The Nebraska Department of Economic Development and its representatives waive any financial responsibility for the accuracy of these numbers should they be relied upon by anyone outside this State agency.
For computing Personal Property Tax Exemption amounts in Tier 4, you can use the individual County and Local Subdivision tax rates found here.
Other components incorporated into the Nebraska Advantage package include
Rural Development Advantage
Amends the Employment Expansion and Investment Incentive Act, formerly LB 608 passed in 2003, to provide qualified businesses with refundable tax incentives for projects that create 2 new jobs and invest $125,000 in counties with less than 15,000 residents. Tele-workers count as new employees. In addition, the $250,000-investment and 5-job thresholds remain in place for counties with populations 15,000-25,000.
Nebraska Customized Job Training Advantage
Provides a flexible and discretionary job training program with grants from $800 to $4,000 per qualified new job. Additional grant funds may be available for new jobs created in rural and high poverty areas. You can design your own training, or a statewide training team can assist with training needs and assessments, training plans, curriculum development, and training instruction.
Nebraska Advantage Research and Development Credit
Offers a refundable tax credit for qualified research and development activities undertaken by a business entity for 21 years. The credit is equal to 15 percent of the federal credit allowed under Section 41 of the Internal Revenue Code of 1986 for research and development. The credit is increased to 35 percent of the federal credit allowed under Section 41 of the Internal Revenue Code of 1986 for expenditures on the campus of a college or university in Nebraska or a facility owned by a college or university in Nebraska.
Nebraska Advantage Microenterprise Tax Credit
Provides a 20 percent refundable tax credit to micro businesses on increased compensation for employees or increased investment in targeted communities. Applicants may qualify for a maximum $10,000 throughout the life of the program. The credit is limited to companies with five or fewer employees at the time the application is filed, including start-ups. Credits are approved on a first-in-first-out basis through an application process with the Nebraska Department of Revenue. The credits are earned on increased expenditures for wages, buildings, certain expenses, and non-vehicle depreciable personal property.
And even more Advantages!
Community Development Block Grant (CDBG)
Loans designed to create quality jobs and promote new investment. CDBG funds must be used to benefit low to moderate income persons, aid in the prevention or elimination of slums or blight, or meet other community development emergency needs. CDBG funds can be used to purchase machinery, equipment and inventory, meet working capital needs, develop community infrastructure, construct or renovate existing buildings and real estate.
Capital Gains & Extraordinary Dividend Exclusion
Exemption from state personal income tax on capital gains realized from selling or exchanging stock of one corporation acquired by an employee with that corporation. The employee can also exclude extraordinary dividends that exceed 20% of the value of the stock for the same corporation. The corporation must have done business in Nebraska for at least three years and must have a minimum of five shareholders, and related shareholders cannot own more than 90% of the stock.
State and local sales tax exemptions of manufacturing machinery, equipment, and related services
Manufacturing machinery and equipment is defined to include: equipment for transporting raw materials or components, molds and dies for forming cast or injected products or its packaging materials, machinery to maintain the integrity of the product or environmental conditions, testing equipment for quality control, computers that control a manufacturing process, machinery used to produce steam, electricity, catalysts, and solutions, repair or replacement parts, and all installation, repair and maintenance service performed on such equipment.
Manufacturing Machinery and Equipment Sales Tax Exemption
MANUFACTURING MACHINERY & EQUIPMENT (Excerpt from LB312) Statute
* Explanatory Notice from Nebraska Department of Revenue
Nebraska Advantage Use ReportJanuary-March 2012