Every business owner should take time to read this article. Business owners in Nebraska have cause for celebration following this year’s legislative session. Starting next year, Nebraska businesses will begin to see new tax relief. Passing by a vote of forty-seven to zero, LB 259, which was introduced by Senator Mike Gloor of Grand Island and signed into law on May 27, 2015, provides personal property tax relief for Nebraska businesses.
Taxpayers are currently required to pay personal property tax on all depreciable tangible personal property which is used in a trade or business and has a life of more than one year. “Personal property” typically includes all property other than real property and franchises, with a few exceptions. The amount of tax owed is based on the “net book value” of the personal property in question, which is a factor of the item’s adjusted basis, the year the item is acquired or put to use, and the item’s federal cost recovery period.
As explained by Senator Gloor in his Statement of Intent for LB 259, the law was meant to “exempt the first [$10,000] worth of personal property value for each personal property tax return filed” by Nebraska businesses. The original draft of the bill requested an exemption for the first $25,000 of personal property value, but the bill was eventually amended to exempt only the first $10,000. With continued efforts, perhaps Nebraska will see this exemption increase to that twenty-five-thousand-dollar threshold, or may even see the personal property tax completely eliminated.
The recent progress seen in the passage of LB 259 reduces the ultimate tax burden on businesses. Estimates suggest the law will result in approximately $16 million to $20 million in overall tax relief for businesses throughout Nebraska. According to Senator Gloor, LB 259 is expected to result in an average savings of $162 in personal property taxes for each business owner, equal to a savings of about 9% in personal property tax for each business. This reduction is an important step in alleviating the overall tax burden faced by Nebraska businesses.
Businesses will see the tax savings of LB 259 impact their bottom line beginning next year when the law takes effect. If you have questions about how LB 259 will impact your business directly, contact your accountant. If you have ideas about how you believe we can continue to improve Nebraska’s tax climate to the benefit of Nebraska businesses, or if you would like to become involved in efforts to do just that, please contact the Lincoln Independent Business Association at our offices in Lincoln, Nebraska.
LIBA studies and promotes these types of issues that are important to businesses and our community. If you have an interest in joining LIBA, please call me at (402) 466-3419. LIBA membership is not restricted to just businesses. We also have “individual” memberships for those who want to help influence our local government decisions.
By Coby Mach, President & CEO
www.liba.org | 402-466-3419