Tax Credits for Working Families

Nebraska

Earned Income Tax Credit^

Income Tax Rate: Graduated, 2.56-6.84 percent

State EITC: Yes

Refundable: Yes

Enacted: 2006

Formula: 10 percent of the federal EITC

Notes/News: In 2013 Governor Heineman proposed eliminating the state’s income tax, which would have automatically eliminated this credit, but withdrew his proposal after substantial opposition from a wide range of stakeholders.

In January 2014, senators introduced a bill, LB956, to increase the state’s EITC from 10 percent to 13 percent of the federal credit.

 

Reports/Materials: Tax Modernization Committee Public Hearing Agenda, Nebraska State Legislature, September 6, 2013

Nebraska Income Tax Expenditures, Open Sky Policy Institute, August 2013

Nebraska State & Local Taxes, from Who Pays? A Distributional Analysis of the Tax Systems in All 50 States, Institute on Taxation and Economic Policy, January 2013

Nebraska: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009

A State Earned Income Tax Credit in Nebraska: Help Hard-Working Families Become Self-Sufficient, Voices for Children in Nebraska, March 2006

Nebraska Families: Poverty Despite Work, Voices for Children in Nebraska, May 2003

Articles: Heineman signs tax relief package, Southwest Nebraska News, May 19, 2007

Heineman signs tax-cut bill, Nate Jenkins, Lincoln Journal Star, April 7, 2006

Governor signs tax-cut bill: Reductions to total about $100 million a year, Omaha World-Herald, April 7, 2006

Tax cut plan helps poor working parents most, Nancy Hicks, Lincoln Journal Star, March 18, 2006

Nebraska Needs Its Own Version of Earned Income Tax Credit (Op-ed), Susan Scott, Lincoln Journal Star, February 13, 2006

Child Tax Credit^

State Credit: No

Child and Dependent Care Tax Credit^

State Credit: Yes

Refundable: Only if income is below $29,000

Eligibility: All filers with expenses that qualify for the federal credit

 

Formula: Filers earning less than $22,000 may claim 100 percent of the federal credit. Filers earning between $22,000 and $29,000 may claim a percentage of the federal credit, outlined on the table below:

Income

Percentage of federal credit

$22,000-$22,999

90 percent

$23,000-$23,999

80 percent

$24,000-$24,999

70 percent

$25,000-$25,999

60 percent

$26,000-$26,999

50 percent

$27,000-$27,999

40 percent

$28,000-$28,999

30 percent

≥$29,000

25 percent

The maximum credit for one child is $1,050 and the maximum credit for two or more children is $2,100.

Notes/News: In 2013 Governor Heineman proposed eliminating the state’s income tax, which would have automatically eliminated this credit, but withdrew his proposal after substantial opposition from a wide range of stakeholders.

Reports/Materials: Nebraska Income Tax Expenditures, Open Sky Policy Institute, August 2013

Property Tax Circuit Breaker^

Circuit Breaker: No

Notes/News: Nebraska does offer a homestead exemption that credits a predetermined percentage of filers’ property tax bills based on their income. Because the credit does not take into account what percentage of household income is paid in property taxes, it is not a circuit breaker. For more information see the Nebraska Department of Revenue website: Nebraska Homestead Exemption

In January 2011, the Agricultural Tax Credit Act was introduced to create a property tax circuit breaker for farmers. It remained in committee throughout the 2011 session, and has been carried over to the 2012 session.