BUSINESS WATCH

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

 

 

OTHER PROVISIONS In addition to the adoption of the Nebraska Advantage Act, LB 312 has a number of other business incentive provisions. LB 312 amends the current Employment Expansion Investment Incentive Act and changes its name to the Nebraska Advantage Rural Development Act. It also provides for research and development tax credits that provide income and sales tax benefits; adopts the Small Business Micro-Enterprise Tax Credit Program; enacts a sales and use tax exemption for manufacturing machinery and equipment, and exempts certain manufacturing-related services – including installation services – from sales and use taxes; and provides new rules governing disclosure of business tax incentive information on a project-by-project basis. 

 

The Research and Development Tax Credit is generally equal to 3% of the amount spent in Nebraska on qualified research and experimental activities (as defined in IRC Sec. 174) in excess of a determined average amount spent in the prior two years. It should be noted that the research and development tax credits can be claimed by any private entity, such as a corporation, LLC or sole proprietorship that is subject to sales and use taxes in Nebraska; however, the credit can not be claimed by a political subdivision or an organization exempt from income taxes under IRC Sec. 501(a). 

 

The Small Business Micro-Enterprise Tax Credit Program provides an investment tax credit to an applicant who creates or expands a micro-business (which is defined as any business employing five or fewer employees) that contributes to the revitalization of economically depressed areas through the creation of new or improved self-employment or other new jobs in the area.

 

The Sales and Use Tax Exemption for manufacturing machinery and equipment applies to the sale, lease, rental, storage, use, or other consumption of manufacturing machinery and equipment. It also includes installation, repair and maintenance services performed on or with respect to the manufacturing machinery and equipment.

 

LB 312 is a comprehensive, multi-dimensional business development tax incentive package that covers a wide variety of situations and businesses and provides a substantial number of benefits. It is far too complex and broad to cover in detail in this article. If you have any questions about qualification for tax incentives under the Act, please don’t hesitate to give us a call and we will help you sort through the regulations and achieve your greatest benefits. 

 

 

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