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Incentives

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The Nebraska Advantage incentive package was designed to create a business climate that makes Nebraska the preferred location for starting and growing your business. The Nebraska Advantage incentive package rewards businesses that invest in the state and hire Nebraskans.  Through Nebraska’s progressive, pro-business tax climate, companies receive reduced or virtually eliminated corporate income and sales taxes!

Nebraska Advantage Program (LB 312)

The Nebraska Advantage program can substantially reduce, and in certain cases eliminate, a company’s income, sales, payroll withholding and certain classes of personal property taxes for up to 15 years. The program is designed to reward companies via a performance-based system both short and long term. Highlights of the program include:

  • Tax credits and sales tax refunds based on a flexible, six-tier investment and job creation schedule
  • Tax credits to reduce or eliminate payroll withholding, sales, property and income tax liabilities
  • Companies have five to seven years to attain required job- and investment-creation levels and can utilize credits against the various tax liabilities for up to 15 years

Qualifying business categories are:

  • Manufacturing
  • Call centers, data centers and telecommunications
  • Headquarters/administrative operations
  • Data processing and Web portals
  • Insurance and financial services
  • Distribution and warehousing
  • Research and development
  • Satellite ground services
  • Exportable services including: software development, computer systems design, product testing, guidance or surveillance systems and technology licensing

Nebraska Advantage has six “tiers” of benefit qualifications based on investment, wage rates and jobs created.

TIER

INVESTMENT

JOB CREATION

One

$1 million

10

Two

$3 million

30

Three

$0

30

Four

$12 million

100

Five

$36 million

0 (maintain employment)

Six (Option One)

$12 million

75 high-paying jobs*

Six (Option Two)

$122 million

50 high-paying jobs*

*High-paying job = 200 percent of average county wage or 150 percent of average state wage, whichever is higher

By offering both compensation and investment credits, the Nebraska Advantage program provides a truly unique model allowing both types of credits to be applied in a variety of combinations. For example, depending on the size and scope of a project, compensation credits can reduce labor costs anywhere from three to six percent per year and, for qualifying Tier Six projects, a 10 percent credit applies.

Compensation credits can be used to reduce or eliminate a company’s payroll withholding tax liability, sales and use tax paid, real property taxes or state corporate income tax liability. Under this provision, companies retain a portion of withholding tax attributable to new employees. The compensation credit is a sliding-scale credit based on the average wage of new employees (as determined by the W-2 numbers) multiplied by the number of new employees. The percentage of credits is based on the Nebraska average weekly wage for the year of application and is adjusted annually.

Investment tax credits can be used to reduce the company’s state corporate income tax or sales and use tax liability on company purchases to the extent that such liability is attributable to the project. The credit is based on the company’s investment in qualified property, which includes building, equipment and components, during the entitlement period. For leased space, investment is equal to the annual lease rate multiplied by the term of the lease up to 10 years.

  • Tier One is a three percent credit
  • Tier Two is a 10 percent credit
  • Tier Four is a 10 percent credit
  • Tier Six is a 15 percent credit
  • No investment tax credit is available for Tier Three or Tier Five

Use of Credits

Credit Use
Compensation Credit
  • Income Tax
  • Sales Tax
  • Employee Withholding
Investment Credits
  • Income
  • Sales Tax

Refund of sales and use taxes is provided on a project’s capital purchases from the date of application through the meeting of the required levels of investment. The refund of sales and use taxes continues for qualified property after the taxpayer reaches the required levels through the entitlement period. By statute, new construction sales-tax credit is estimated by taking 50 percent of the construction price of a new building and improvements multiplied by the sales tax rate

  • This is available under Tiers One, Two, Four, Five and Six.

Refund of sales and use taxes on non-capital purchases (i.e. consumables and utilities) may be credited back to the company by using investment and compensation tax credits.

  • This is available under Tiers One, Two, Three, Four and Six.

Personal property tax is exempt in certain cases under the Nebraska Advantage program.

  • There is no personal property tax exemption under Tiers One, Two and Three.
  • The exemption under Tiers Four and Five is for up to 10 years for computer systems, agricultural processing machinery and personal property used in a distribution business.
  • The exemption under Tier Five is for up to 10 years on computer systems for Internet Web portals.
  • The exemption for Tier Six is granted for all tangible personal property at the project site for 10 years.

Real property tax refund is granted for real property at the project site for 10 years by utilizing available investment and compensation tax credits against real estate tax liability. This would be available at only one property. Leased property is also eligible for the refund.

  • The real property tax refund is available only under Tier Six.

The attainment period is the length of time after submitting an application that a company has to reach the threshold of investment, wages and employment under each tier.

  • Tiers One and Three is up to five years.
  • Tiers Two, Four and Five is up to seven years.
  • Tier Six is up to five years.

The entitlement period is the number of years a business may generate and use benefits and includes the year the investment, wages and jobs are met, plus the allowed entitlement period. The carry-over period is the length of time a company may continue to utilize benefits earned but not used during the entitlement period.

  • Tiers One and Three entitlement period is six to seven years, depending on the year of attainment.
  • Tiers Two, Four and Five entitlement period is the year of attainment plus the next six years. Credits may be carried over until fully utilized up to 14 years after the year of application for projects qualifying under Tiers Two, Four and Five.
  • Tier Six entitlement period is ten years with a one year carry-over period.

Customized Job Training Program

The Customized Job Training Program, administered by the Nebraska Department of Economic Development, offers comprehensive on-the-job training grants for new and expanding Nebraska businesses. Customized Job Training funds are used for on-the-job training for newly created production positions (managers, supervisors, accounting, clerical/office and janitorial positions are not eligible). Funds may reimburse the business up to 50 percent of the employee’s wages during the training time up to the allotted dollar amount (see table below). The business must retain all positions created for two years after the training has been completed.

The following table identifies the assistance levels available for Customized Job Training grants.

Customized Job Training Grants, Per Job,
For New Jobs Created – Greater Omaha

Percent of Average Starting Wage

Average
Starting Wage

Range of
Assistance

100%

$9.87

$500

125%

$12.34

$1,000

150%

$14.80

$2,000

175%

$17.27

$3,000

200%

$19.74

$4,000

Source: Nebraska Department of Labor, Labor Market Information, website, June 2008; DED estimates