Nebraska has adopted a new incentive act called “ImagiNE Nebraska Incentive Act”. This act will provide sales and use tax, personal property tax, and income tax incentives to any qualifying businesses that meet the required hiring and investment thresholds. This new act is set to replace the Nebraska Advantage Act, which will be terminated at the end of this year.
There are multiple different thresholds that businesses can meet in order to reach tax incentives. The minimum requirement to receive tax breaks is to invest $250,000 to $1 million and hire at least five new employees. If these requirements are met, the taxpayer is eligible to receive wage credits that can be used for reducing the taxpayer’s income tax or to obtain a sales and use the tax credit. The taxpayer can also receive investment credits to obtain a sales and use tax refund. These benefits are also eligible for any business that invests $1 million and hires ten new employees.
In addition to the benefits available to businesses exceeding the $1 million investment and ten employee thresholds, benefits increase substantially when increased thresholds are reached, however, the requirements to reach these benefits are much higher than the previous tier. The final list of benefits includes personal property tax exemptions, state and local sales and use tax refunds on certain purchases made up until the required investment and hiring thresholds are met, and sales and use tax exemptions on the specified property during each year of the performance period. Along with these new incentives, businesses will also receive wage credits and investment credits from the first tier of incentives. In order to reach this level of tax incentives, businesses must meet the requirements of investments of $5 million along with the hiring of 30 new employees, or $250 million of investments along with the hiring of 250 new employees.
For any taxpayer that wishes to receive some benefits, but does not have the capacity to grow personnel within the company, there are other options. If the business invests $50 million, the taxpayer is eligible for personal property tax exemptions, state and local sales and use tax refunds on certain purchases, and sales and use tax exemptions on the specified property for each year under the performance period.
In order to be eligible to receive any of these tax incentives, taxpayers must have qualifying locations within the state of Nebraska and meet the specified business classifications. Specified business classifications to qualify for the incentives include, but are not limited to, manufacturing, testing laboratories, and data processing. A “qualifying location” in Nebraska also includes any business location where at least 75% of revenue is from sales to customers that are not related persons and are delivered to any location outside of Nebraska.
If a taxpayer meets the initial requirements, they then must apply to receive any benefits from investing and hiring new personnel. A taxpayer can apply with the Department of Economic Development to request an agreement to one of the qualifying tiers or investment and hiring requirements. If an agreement is met, the agreement will last up to 15 years, however, investment and hiring requirements must be met by the end of the “ramp-up period”, which is four years after the application year. Applications will not be accepted after December 31, 2030.
For help understanding if your business qualifies for these tax incentives, please contact our EFPR Group SALT professionals today!