Business Incentives

In May 2005, Nebraska signed into law a new generation of benefits designed to enhance Nebraska's competitive edge by expanding business and attracting new opportunities to the state. New investment and employment in ethanol production facilities may qualify for tax incentives through the Nebraska Advantage Package.

The Nebraska Advantage Package was designed to create a business climate that makes Nebraska the preferred location for starting and growing businesses. There are various tiers under this act that provide incentives based upon thresholds in respect to employment and investment. These programs include refund of sales taxes paid; slide scale job credits and investment credits. A significant enhancement is that manufacturing machinery and equipment would be exempt from sales tax.

THE NEBRASKA ADVANTAGE

LB312 (effective January 1, 2006)

• Nebraska Advantage - Rewards businesses that invest in the state and hire Nebraskans. In this progressive, pro-business tax climate, corporate income and sales taxes are reduced or virtually eliminated. (Download brochure)
• LB312 & LB90 - Concepts originally proposed as separate legislative bills also have been incorporated into the structure of LB312 and LB90, including state and local sales tax exemptions for the purchase of manufacturing machinery, equipment and related services.
• Nebraska Research & Development Advantage - Allows qualifying research and development companies to claim a tax credit equal to 15 percent of the federal tax credit for increased expenses related to research & development.
• Nebraska Micro-Enterprise Tax Credit Program - Allows a business with five or fewer employees that make up to $10,000 in new investment in an economically struggling community or area will quality for a 20 percent refundable investment tax credit.
• Nebraska Rural Development Advantage - Amends the Employment, Expansion and Investment Incentive Act (formerly LB608 passed in 2003) to provide qualified businesses with refundable tax incentive for projects creating two new jobs and investing $125,000 in counties with less than 15,000 residents or businesses creating 5 jobs with $250,000 investment if located in a county with less than 25,000 people.

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LB90 (effective January 1, 2006)

• LB 90 - The second bill making up the Nebraska Advantage, addressing rural development and emphasizing the contributions made by Nebraska's entrpeneurs, as well as agricultural and value-added industries, including alternative fuels such as ethanol.
• Nebraska Agriculture Innovation Advantage - Reauthorizes a value-added grant program providing grants up to $75,000 to cooperatives, groups or associations to help offset the costs of research, education, training and market development of value-added products sold by producers.
• Building Entrepreneurial Communities Act - Provides grants up to $75,000 to rural communities to implement collaborative projects addressing issues related to chronic economic distress, unemployment, below-average per capita income, and severe population loss.
• Nebraska Customized Job Training Advantage - Provides a flexible, discretionary custom job-training program to help ensure the state's workforce is prepared for advances in rapidly changing industries.

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Nebraska Super Advantage (2008)

LB 895 makes innovative changes to the Nebraska Advantage Act. In order to attract companies to Nebraska that will pay high wages and invest heavily in our State, the Governor introduced the Nebraska Super Advantage. The wage thresholds are the greater of 200% of the county average wage or 150% of the Nebraska average wage. All businesses qualify, except retail. The details of the bill follow:

2-level tier: To qualify, a company must either create 75 jobs at or above the thresholds above while investing $10 million OR create 50 jobs at the thresholds above while investing $100 million. If they do qualify, they would receive the following:

Customized Job Training (effective July 1, 2005)

The purpose of the Nebraska Customized Training Grant Program is to provide employee training assistance to businesses that maintain, expand and diversify the state's economic base and, in the process, retain and create quality jobs for Nebraska residents. These funds are administered by the Nebraska Department of Economic Development (DED). Program priorities are as follows:

• Customized training projects that result in increased investment and employment and where the training assistance is a significant incentive for the project to be undertaken in Nebraska rather than in another state;
• Non-incentive customized training projects where there is increased investment and employment but no incentive is involved; and,
• Customized training projects that involve retraining of existing workers to upgrade their skills as a result of investment in new capital.

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Microenterprise Development Fund Enhancement (effective January 1, 2006)

Also part of the economic development package is the Microenterprise Development Fund Enhancement, which doubles the total support for technical assistance and loans for microenterprises to $500,000.

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Financing for new or expanding businesses is also available from both the public and private sectors.

Highlights of Nebraska's corporate tax structure include:

• No state property tax.
• No sales or use tax on energy for manufacturing use.
• No property tax on business inventories, including raw materials, goods in process, and finished goods.
• A refund of sales tax for pollution control equipment.
• No tax on intangibles.

For more detailed information on the incentive programs, please refer to the program specific information. If you have any questions, please contact Mary Hugo at (402) 471-5790 or by e-mail at mary.hugo@rev.ne.gov.