Nebraska’s Path to the Top Ten, Four More Years of Tax Reform

Nebraska’s Path to the Top Ten, Four More Years of Tax Reform

To download the full “Nebraska’s Path to the Top Ten Report” click here.


Nebraska entered 2022 with one of the least-competitive tax systems in a highly competitive region. But then a structural surge in tax revenues was utilized by lawmakers to perform Nebraska’s two-year tax transformation. Across two governors and two years, Nebraska lawmakers delivered unprecedented tax relief and considerable improvements in the state’s individual income tax and corporate income tax. 

After such transformational success, policymakers might rightly wonder what should come next, and whether Nebraska should take a year off from tax reform. 

The Platte Institute recommends that Nebraska’s two-year tax transformation be followed by four more years of thoughtful, pro-growth tax reform that will modernize the state’s tax code while allowing the 2022-2023 reforms to securely phase in.   

Nebraska’s Two-Year Tax Transformation 

Nebraska’s two-year tax transformation overhauled the state’s individual income tax and corporate tax, and delivered substantial property tax relief. 

  • Income tax reforms 
    • The individual income tax was cut from 6.84% to 3.99% while the corporate income tax was cut from 7.25% to 3.99%. Social security income was excluded from income taxation. 
  • Property tax reforms 
    • Nebraska’s community college property tax was eliminated and replaced with state funding, reducing property taxation by 5.5% statewide. Hundreds of millions of annual property tax relief was delivered through expanded property tax credit programs.
  • Total tax relief 
    • The tax relief delivered by LB 873 (2022), and LB 754 and LB 243 (2023) will amount to $3,000 per household once the reforms are fully phased in.  

 Nebraska’s 2022 and 2023 reforms addressed the most uncompetitive components of Nebraska’s tax code – namely its high-income tax rates and heavy property tax burden.

Target 2024 

Platte Institute encourages Nebraska lawmakers to boldly move forward with new tax and fiscal reforms in 2024. After transformational income tax reform in 2022 and 2023, lawmakers should emphasize spending controls and property tax reforms in 2024.   

  • Fiscal Restraint 
    • Nebraska should continue its tradition of spending restraint in order to allow the 2022 and 2023 tax reforms to phase in smoothly, and to create fiscal space for additional reforms. 
  • Two-tier tax cap 
    • Nebraska should apply its Truth in Taxation transparency process to the first dollar of property tax increase. In addition, a harder levy cap should be imposed, requiring a voter referendum approval, for levy increases beyond inflation. 
  • Direct property tax relief 
    • Funds from Nebraska’s Property Tax Incentive Act tax credit should be delivered to school districts proportionate to each district’s share of statewide property value with a mandate that each dollar be used for property tax levy reduction. 
  • November bond elections 
    • School bond elections should be exclusively held in November elections to ensure voter turnout and community buy-in if districts seek to take on debt. 
  •  Inheritance tax repeal 
    • Nebraska’s outdated inheritance tax should be repealed. 
  •  Safe harbor for remote workers 
    •  Nebraska’s income tax should be reformed to create a 30-day safe harbor for remote workers who temporarily work in Nebraska. 

 Additional reforms for future years should include full expensing for business investments, removing GILTI income from the business tax base, eliminating Nebraska’s capital stock tax, creating a $20,000 tangible personal property tax de minimus exemption, and expanding the sales tax to include more services. These reforms would not carry as large a fiscal note as the 2022 and 2023 reforms, but they would substantially improve Nebraska’s tax structure. 

According to an assessment from Tax Foundation’s State Business Tax Climate Index, if these reforms along with the 2022 and 2023 changes were all full phased today, Nebraska’s tax ranking would dramatically improve from #30 to #8 in the country.

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