- Sales Tax: 7.0% (5.5% State; 1.5% City of Lincoln)
- Individual Income Tax: Marginal individual income tax rates range from 2.56 to 6.84 percent. There is no local income tax in Lincoln.
- Corporate Income Tax Rates: 5.58% for the first $50,000 of the federal taxable income and $2,790 + 7.81% in excess of $50,000.
- Property Tax Levy, 2010: 1.9959500
Based on 100% of appraised valuation
A variety of state and local incentives, training, and financing assistance are designed to attract and retain businesses in Lincoln. Nebraska Advantage a comprehensive package of economic development incentives. Nebraska Advantage contains 6 tiers of benefit:
- Tier 1 - $1 million investment/10 new jobs
Refund of ½ the sales tax paid on project’s capital purchases, the full sliding scale job credit of 3, 4, 5 or 6% depending on wage level, and a 3% investment tax credit.
- Tier 2 - $3 million investment/30 new jobs
Refund on all sales tax paid on project’s capital purchases, the full sliding scale job credit of 3, 4, 5 or 6% depending on wage level, and a 10% investment credit.
- Tier 3 – No investment/30 new jobs
Requires creation of 30 new jobs. Companies receive the full sliding scale job credit of 3, 4, 5 or 6% depending on wage level. No capital investment is required.
- Tier 4 - $11 million investment/100 new jobs
Refund on all sales tax paid on project’s capital purchases, the full sliding scale job credit of 3, 4, 5 or 6% depending on wage level, a 10% investment credit, and a personal property tax exemption on turbine-powered aircraft, computers systems, agricultural processing machinery and personal property used in distribution facilities for up to 10 years.
- Tier 5 – $33 million investment/Maintain Employment
Refund of all sales tax paid on project’s capital purchases and a personal property tax exemption on computer systems for internet web portal for up to 10 years.
- Super Tier 6 – $10 million investment/75 jobs or $100 million investment/50 jobs
Refund of all sales tax paid on project’s capital purchases, a 10% job credit on wages above specific threshold, a 15% investment credit, and a personal property tax exemption for up to 10 years.
Additional components of Nebraska Advantage Package
- Nebraska Research and Development Advantage
Provides a tax credit for research and development activities by any qualified business entity. Allows a research tax credit to business firms that increase research expenditures in Nebraska. The credit is equal to 15% of any research and development expenditures that are greater than the average of the previous two years research and development spending. An important feature is that business with little or no income may take advantage of the income tax credit by receiving a sales tax refund or a refundable income tax credit.
- State and local sales tax exemptions of manufacturing machinery, equipment, and related services
Manufacturing machinery and equipment is defined to include: equipment for transporting raw materials or components, molds and dies for forming cast or injected products or its packaging materials, machinery to maintain the integrity of the product or environmental conditions, testing equipment for quality control, computers that control a manufacturing process, machinery used to produce steam, electricity, catalysts, and solutions, repair or replacement parts, and all installation, repair and maintenance service performed on such equipment.
- Customized Job Training Program
Provides training assistance to qualifying companies that sell goods/services primarily to a non-Nebraska market. Eligible training projects include new investment in Nebraska that create full-time jobs or require retraining of existing full-time positions in order to retain those positions in Nebraska. Program details available at: http://www.nebraskaadvantage.biz/customizedjobtraining.htm
- Talent & Innovation Initiative (T12)
Put forth to develop and attract businesses rooted in technology and innovation. Key elements of the initiative include internship opportunities, funding for new technologies, site and building development, and Nebraska Angel Investment Tax Credit.
- INTERN NEBRASKA PROGRAM (LB 386)
Creates new internship opportunities for college and university students to gain job experience working with companies across the state. The program went into effect on June 1. Program information and applications can be found at www.InternNE.com. LB 386
- BUSINESS INNOVATION ACT (LB 387)
Provides funding to help businesses develop new technologies that lead to quality job opportunities across the state. Competitive grants will provide funding and technical assistance for research at Nebraska institutions, new product development and testing, and help expand small business and entrepreneur outreach efforts. LB 387
- SITE AND BUILDING DEVELOPMENT FUND (LB 388)
Increase industrial and commercial sites available and ready for business development. LB388
- ANGEL INVESTMENT CREDIT TAX (LB 389)
- Encourages investment in high-tech and other startup Nebraska enterprises by helping attract private funding. The tax credit is refundable and available to a wide range of industries making Nebraska’s Angel Investment Tax Credit one of the most competitive in the nation. LB 389
- For more information contact Jason Smith, firstname.lastname@example.org, 402.436.2373 or link to www.nebraskaadvantage.biz.
Additional incentives available in Lincoln
- Community Improvement Financing
Tax increment financing (TIF) of the cost of public improvements for projects located in blighted and substandard areas. Its purpose is to reduce developer capitalization to a level that makes investment feasible. Public improvements include land purchase, clearance and sale, construction of streets, sidewalks, utilities, parks or other similar public spaces necessary in site preparation.
- New Market Tax Credits (NMTC)
The New Markets program helps revitalize targeted urban and rural geographic areas through the retention and creation of jobs, the renovation and expansion of vacant business properties, community facilities, and the purchase of major equipment for business expansion. Eligible borrowers can obtain loans with lower interest rates and terms up to 25 years, creating a lower monthly payment and allowing borrowers to keep more cash in their businesses. The New Markets loan enables borrowers to expand and renovate their existing properties, buy the properties outright, or purchase additional property for business expansion. For loan information link to: http://www.cdr-nebraska.org/nmtcbusiness.pdf
- Capital Gains Exemption
One-time exemption from state personal income tax on gains realized from selling or exchanging stock of a corporation acquired by an employee with the corporation. The corporation must do business in Nebraska for at least three years and must have a minimum of five shareholders. The provision is an excellent recruitment tool for growth-oriented companies that use company stock options as part of employee compensation or retirement programs.
- Industrial Development Bonds
Designed to encourage economic and industrial development through the investment of private capital. Industry targets include manufacturing, warehousing, transportation, and tourism.
- Community Development Resources (CDR)
Technical assistance, training and access to capital for new and existing businesses.
- Nebraska Economic Development Corporation (NEDCO)
State-chartered nonprofit corporation that provides long-term capital loans to businesses unable to secure regular bank credit. NEDCO can make long-term loans (up to 20 years) to eligible small businesses for fixed asset projects. Financing is limited to 40 percent of the project’s total cost up to $750,000 or $35,000 per job created or retained. Revolving loan fund financing is limited to $150,000 or 75 percent of the project cost not to exceed $15,000 per job created or retained.
- Nebraska Worker Training Program
Provides grants to assist firms in the retraining and upgrading of existing employees. Grants are awarded on a quarterly cycle. A match of at least one dollar of employer’s funds (including wages for participating employees) for each dollar of state funds is required. Use of program funds is extremely flexible. The type and length of training programs, training vendors and materials are chosen by the company.
http://www.dol.state.ne.us/nwd (click on Employer Services, Worker Training)
- Work Opportunity Tax Credit (WOTC)
Provides a credit against federal income tax liability of up to $2,400 for each qualified hire. Qualified employees include 18 to 24 year old food stamp recipients, disabled persons, low-income ex-felons, and persons receiving SSI benefits.
http://www.dol.state.ne.us/nwd (click on: Employer Services)
- Business Assistance Programs
Lincoln has numerous assistance programs to help businesses stay competitive or find financing. Programs include:
- Nebraska Business Development Center (NBDC) which assists in business planning, analysis, market research, feasibility studies and microcomputer training.
- The Food Processing Center at UNL provides expertise for the food processing industry in manufacturing, technology, marketing and business development.
- In addition to specific incentives, the business climate is enhanced by:
- No state-levied property tax.
- ‘Sales-only’ corporate income tax apportionment factor.
- No property tax on business inventories.
- No tax on intangibles.
- Performance-based state and local sales tax credits and refunds for qualifying firms.
- Personal property tax depreciation schedules permitting full 100% depreciation.
- No sales tax on electricity, coal, gas and fuel oils when more than one-half used directly in processing or manufacturing.
- No sales or use tax on ingredients used in manufacturing or processing of a product destined for ultimate retail use.
- No sales tax on most food or prescription drugs.
- No sales tax on common carriers’ vehicles and replacement parts.
- Sales tax refund on air and water pollution control equipment.