(Lincoln, Neb. )| Audio |Photos | Gov. Dave Heineman today signed LB 888 into law. The bill lowers taxes for Nebraska businesses and is the first adjustment to the state’s corporate tax brackets since 1982.

The bill provides tax relief that is aimed at small businesses by extending the lower tax bracket for corporate income tax filers 

“This law will have a positive impact on our ability to attract new businesses to our state and keep our existing businesses growing,” Gov. Heineman said. “Lowering taxes plays a critical role in local economic development efforts. This bill will help more of our homegrown businesses develop and prosper, and will enhance our competitiveness as we recruit new businesses here to our state.”

The bill adjusts the state’s corporate income tax by expanding the current $50,000 income cap to $100,000. Businesses will now pay a 5.58 percent tax on earnings of up to $100,000 rather than the $50,000 cap outlined in current state tax code. Earnings above $100,000 will still be taxed at 7.81 percent 

LB 888 was introduced by Sens. Carroll Burling of Kenesaw, Tim Gay of Papillion, Pete Pirsch of Omaha, and was prioritized by Sen. Scott Lautenbaugh of Omaha.

Sen. Burling said, “I introduced LB 888 to call attention to the fact that the $50,000 threshold between the low and high corporate income tax bracket had been in statute approximately 30 years. It is necessary to update our statutes occasionally to address the effects of inflation on tax bracket creep. The tax savings should result in increased investments that lead to economic development and contribute to a stable tax base.”

Nebraska Tax Commissioner Doug Ewald said, “While all businesses that file as corporations will benefit from this law, our 1,200 small businesses will experience the greatest positive impact.”

The Tax Foundation reports that of the surrounding states with a corporate income tax, only Iowa had a higher corporate tax than Nebraska, at 12 percent for income over $250,000. Between Iowa, Wyoming, South Dakota, Kansas, Colorado, and Missouri, Nebraska had the second highest rate and the 17th highest rate nationally.

Barry Kennedy, president of the Nebraska Chamber of Commerce & Industry, said, “LB 888 is a sensible and fiscally-sound fix. With the enactment of this important legislation, state senators and the Governor have significantly improved Nebraska’s tax policy and business climate. LB 888 provides Nebraska’s small businesses their own economic stimulus package – one which will boost business investment, create new jobs and keep the state’s economy on track for long-term growth.”

The Legislature passed LB 888 on Monday 48 to 0.