Nebraska senators debate tax cut for corporations and top earners

LINCOLN, Neb. (KLKN) – Nebraska’s top earners and corporations will see a tax cut if a new legislative bill passes.

Legislative Bill 754 aims to slowly lower the top income tax rate for individuals to 3.99% every year starting in January 2027 and lower the corporate income tax rate for all earnings in excess of $100,000 to the same percentage.

The change was proposed by Sen. Lou Ann Linehan of Omaha, who says the new rate would help Nebraska attract new businesses and residents and keep current ones at home.

“Tax climate is critical to all of our constituents,” she said. “All Nebraskans, whether located in Omaha or Scottsbluff, Nebraska, considers taxes when electing where to call home. It is a factor that is considered when to move to Nebraska or move away from Nebraska. Further, it plays a critical role in developing our economy, creating jobs and expanding our workforce.”

Sen. John Cavanaugh of Omaha proposed Amendment 1068, which would make the top rate to 4.99%, in a bid to make the bill more fair.

“It does most everything that is in the package, but it does do a bit of a smaller implementation for the highest earners,” he said. “Still getting that highest marginal tax rate in the state of Nebraska to below 5%.”

Sen. George Dungan expressed his support for the amendment.

“What we are seeking to do is still achieve a reduction in overall income and corporate tax rates by the year 2027,” she said.

He believes that small change could save the state about $300 million.

But the Legislature rejected Amendment 1068.

Deliberation on the bill will continue Thursday.

Linehan said it includes several components of Gov. Jim Pillen’s tax cut and school aid plan.

It also includes amendments based off LB 641, which makes Social Security benefits fully exempt from income taxes by next year, and LB 318, which provides some tax relief to low-income parents and child care providers.