Nebraska lawmakers pass 3 tax reform measures

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LINCOLN, Neb. (AP) - Nebraska lawmakers passed a series of tax measures Thursday that would benefit farmers, low-income elderly homeowners and residents whose incomes rise with inflation.

The three tax proposals won final approval on Thursday, and will now be sent to Gov. Dave Heineman.

One bill would eliminate the sales tax that farmers pay when repairing or replacing their agricultural equipment.

The measure was the first tax proposal debated in this year’s legislative session, in the wake of a statewide study by the Legislature’s Tax Modernization Committee.

Several economists testified at hearings last summer that sales taxes for business purchases create a “pyramiding” effect - increasing the cost of doing business, which is then passed down to consumers. The lead sponsor, Sen. Annette Dubas, of Fullerton, said it’s intended to keep jobs in the machinery repair and parts businesses in Nebraska.

A second proposal would expand Nebraska’s homestead exemption program so that more Nebraskans could qualify. The tax exemption is given to seniors, disabled veterans and their spouses, and people with certain disabilities.

Current state law allows married couples to receive at least a partial exemption until their household income reaches $28,501. The bill would increase that threshold to $46,901.

Sen. Galen Hadley, chairman of the Revenue Committee, said the bill attempts to make it easier for retirees to stay in Nebraska. Other lawmakers have voiced concerns that the bill would shift residential property tax burdens onto younger homeowners as baby boomers retire.

A third measure would ensure that Nebraska’s income tax brackets keep pace with inflation. The bill seeks to address cost-of-living salary increases that can bump taxpayers into a higher bracket, where they end up paying more.

Nebraska’s top tax rate of 6.84 percent kicks in for married couples once their incomes exceed $70,400. For single filers, the top rate goes into effect at $35,200. The rate only applies to the income received at those levels and higher.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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