Benefit Corporations in Nebraska
The Nebraska Legislature passed LB1107, a priority bill that addressed three important issues from the 2020 Nebraska legislative session: property tax reform; an updated business incentives package; and a state funding commitment for a University of Nebraska Medical Center project.
As part of the updated business incentives package, LB1107 included tax incentives for businesses, including benefit corporations. The following is a brief summary of the tax incentives portion of LB1107. For additional information, please visit the Nebraska Legislature’s website at https://nebraskalegislature.gov/bills/view_bill.php?DocumentID=41565.
LB1107 allows taxpayers to enter into an agreement with the Department of Economic Development (DED) to obtain tax credits based on new investments, jobs, and wage thresholds at qualified locations. The agreement is valid for up to 15 years and employment and investment levels must be reached by the end of the ramp up period (4 years after the application was submitted).
A qualified location is a location where most of the business activities conducted fall within one of the following descriptions:
- Manufacturing
- Testing Laboratories
- Rail Transportation
- Truck Transportation
- Insurance Carriers
- Wired Telecommunications Carriers
- Wireless Telecommunications Carriers (except Satellite)
- Telemarketing Bureaus and Other Contact Centers
- Data Processing, Hosting, and Related Services
- Computer Facilities Management Services
- Warehousing and Storage
- Logistics Facilities, specifically dealing with independently operated trucking terminals, independently operated railroad and railway terminals, and waterfront terminal and port facility operations
- Services provided on aircraft not based or registered in the states
- Research, development, or testing for scientific, agricultural, animal husbandry, food product, industrial, or technology purposes
- Using one or more services of renewable energy to produce electricity for sale.
- Computer system design and related services
- Financial services
- Any business location where at least 75% of revenue at the location is derived from sales to customers who are not related persons, which are delivered out of state. However, it is not considered a qualified location if most of the business activities are one or more of the following:
- Agriculture, forestry, fishing, and hunting
- Transportation and Warehousing
- Information
- Utilities
- Mining, quarrying and oil and gas extraction
- Public Administration
- Construction
Figure 1 shows benefits available to taxpayers. Depending on the levels of investments, jobs, and wage thresholds, a taxpayer is eligible for some or all the following: wage credits, investment tax credits, sales tax refunds, personal property tax exemptions, and real property tax refunds
Figure 1: Tax Benefits
(Nebraska Legislature, 2020)
LB1107 requires lower investment, jobs, and wage thresholds for project locations within an “economic redevelopment zone.” The investment, jobs, and wage thresholds for a qualified location in an economic redevelopment zone is $250,000 to $1 million, 5 FTE, and average wages greater than 70% of the state average. Locations that are in extremely blighted areas can earn an additional 1% in investment and wage tax credits.
Qualified locations owned by benefit corporations may also earn an additional 1% in wage and compensation tax credits. The taxpayer must be a benefit corporation for at least one year prior to submitting the application and must remain a benefit corporation for the duration of the agreement.
SOURCE: Nebraska Legislature. (2020). LB1107 - Adopt the ImagiNE Nebraska Act, Key Employer and Jobs Retention Act, Renewable Chemical Production Tax Credit Act, Customized Job Training Act, Nebraska Transformational Projects Act, and Nebraska Property Tax Incentive Act and change and provide other related provisions. Retrieved from https://nebraskalegislature.gov/bills/view_bill.php?DocumentID=41565