BUSINESS WATCH

ADVANTAGE NEBRASKA —  Nebraska’s New Economic Development Incentive Program By Bruce D. Vosburg

 

The recent session of the Nebraska Legislature passed LB 312, a new comprehensive business economic development incentive program which will go into effect January 1, 2006. The heart of LB 312 dealing with business incentives will be known as Advantage Nebraska.  It replaces the LB 775 economic development program that has been in effect in Nebraska for the past several years. After January 1, 2006, no new applications for LB 775 tax credits will be allowed.  Those who have qualified for the LB 775 program in the past will continue to receive the benefits of that program already granted to them.

 

Under the new Advantage Nebraska program there will be a set of five tiers under which businesses can qualify for tax incentives.

 

Tier One – This tier is available to manufacturers, research and development businesses and listed technology-related service providers who sell at least 75% of their goods out-of state or to the federal government.  Those qualifying under this program will have to create $1 million of new investment and at least ten new jobs. Qualifying businesses will then be eligible for a refund of 50% of the sales tax paid on purchases for the project, a sliding-scale jobs credit and a 3% investment credit. Eligibility to apply for Tier One credits will extend for five years and applications will not be accepted after January 1, 2011.

 

Tier Two applies to the same type of companies qualifying under Tier One, but will provide additional benefits for those who create $3 million of new investment and add at least thirty new jobs. Under Tier Two the companies will receive 100% sales tax refund on purchases for the project, the same full sliding-scale jobs credit and, under this tier, a 10% investment credit.

 

Tier Three presents a variation of Tier Two in that it does not require any new investment, but does require the creation of at least thirty new jobs. Under this tier qualifying companies will receive only the full sliding-scale jobs credit.  It is also set to expire in 2011.

 

Tier Four of the Nebraska Advantage program will provide benefits for qualifying businesses which create $10 million in new investment and also create one hundred new jobs. In addition to the same benefits available under Tier Two, that is 100% sales tax refund on purchases for the project, the full sliding-scale jobs credit and the 10% investment credit, qualifying companies will also receive personal property tax exemptions for specific equipment including turban-powered aircraft, mainframe computers, agricultural processing machinery and personal property used in a distribution business.

 

The final tier of the Advantage Nebraska program, Tier Five, applies to qualifying businesses which create $30 million of new investment, but has no requirement for new jobs. Under this tier businesses would receive a 100% sales tax refund for taxes paid on investment for the project. 

 

 

Continued

 

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