May 7 , 2007
Dear Fellow Nebraskans:
I recently signed into law a very substantial series of tax cuts, contained in LB 367. The package is the largest tax relief bill in Nebraska history and is expected to provide $425 million in tax relief over the next two years.
The bill includes reductions in Nebraska’s income, sales and property taxes. One significant component of the package is the elimination of the marriage penalty that has been a part of our income tax structure for far too long in this state.
Of the $152 million in income tax reductions included in LB 367, $146 million over the next two years will go towards eliminating the marriage penalty through adjustments to income tax brackets and standard deduction amounts. The remaining income tax reductions are made up of an expansion to Nebraska’s Earned Income Tax Credit and the expansion of tax credits for renewable energy projects in the state.
A significant portion of the tax relief package will help reduce property taxes across the state, by providing $220 million for property tax credits over the next two years.
Each August the state will make payments to Nebraska counties, based on the total value of property in each county. Property owners will see a reduction noted on their property tax statement, which will reflect the state’s contribution in lowering property taxes.
LB 367 also repeals several taxes, including Nebraska’s estate tax and the sales tax on construction labor.
The repeal of the estate tax will help small business owners and family farmers pass on their life’s work to their next generation of Nebraskans. It will also help ensure that retirees have an opportunity to remain in our state. The repeal of the estate tax will be retroactive to the start of this year and provide more than $37 million in tax relief over the next two years.
The repeal of the construction labor sales tax for commercial enterprises will take effect Oct. 1, and provide more than $14 million in tax reductions over the next two years. With this bill, we have now achieved the full repeal of the sales tax on construction labor. An exemption for home repairs was part of the $90 million tax relief package that passed during last year’s legislative session, and now businesses will have the same advantage already afforded to homeowners.
I want to thank the members of the Legislature for their work in passing a bill that provides truly significant tax relief for Nebraskans, and I also want to thank the many business and community leaders who supported this bill.
Nebraska has been moving in the wrong direction with regard to tax burden over the past twenty years, and that is why my focus has been and will continue to be on lowering the tax burden for the people of our state. We’ve made some important strides when it comes to tax relief over the last two years, and this latest package provides a much-needed boost that will move Nebraska forward.
We won’t get there overnight but my goal is to continue working to reverse the high-tax climate that has developed as our state economy continues to grow. We’ve achieved record reductions this year, and I look forward to what we might do in future years.
