On August 17, 2020, Governor Pete Ricketts signed into law Legislative Bill 1107, which includes a new business tax incentive program called the ImagiNE Nebraska Act. The ImagiNE Nebraska Act replaced the Nebraska Advantage Act (“LB312”) effective January 1, 2021. All existing Nebraska Advantage Act project applications filed through the end of 2020 will continue per the terms of the Nebraska Advantage Act. However, no new Nebraska Advantage Act applications will be accepted after December 31, 2020.
The ImagiNE Nebraska Act is similar to the Nebraska Advantage Act but updated to encourage high-wage jobs, promote investment in distressed and rural areas, simplify administrative requirements, and allow for more transparency and accountability.
Highlights of the ImagiNE Nebraska Act:
- Applications will be reviewed and approved by the Nebraska Department of Economic Development. The Nebraska Department of Revenue will continue to be responsible for auditing investment and employment and approving credits, refunds, and exemptions.
- Qualified activities and qualified locations are much easier to determine. There is no longer a requirement to segregate qualified and non-qualified activities. Either all activities at a project location will be qualified, or none will be qualified.
- All qualified business types are eligible for all application levels. This includes administrative management (headquarters).
- All application levels applied for can be changed up to one year after the year the desired investment/employment levels were met.
- Refunds and use of credits will be capped each year, with only $25 million available in each of 2021 and 2022, increasing to $100 million in 2023 and 2024. In addition, applications may not be approved if future refunds and credit utilization are expected to exceed the calendar year limits.
- Credits, refunds, and exemptions can be claimed as soon as a business attains the required levels. A Qualification Audit is no longer needed before benefits can be realized. The Department of Revenue has the authority to conduct audits at a later date.
- For 2021 applications, base year employment will be the greater of 2019 or 2020 employment. For all subsequent years, the calendar year prior to the application year will be used for determining base year employment levels.
- Average wage requirements are higher than under the Nebraska Advantage Act.
- Lower average wage requirements apply to certain manufacturers and aircraft servicers. Higher compensation credits are allowed for certain manufacturers and aircraft servicers located outside of Douglas, Lancaster, and Sarpy counties.
- Health insurance and benefits must be offered to new full-time employees.
- Non-Nebraska residents are no longer included in the new employment calculations. UPDATE: Non-Nebraska residents can be included for applications filed on 5/25/21 or later.
- Part-time employee hours are no longer included in the calculation of actual new full-time equivalents hired after the base year.
- Extra incentives are allowed for projects in Extremely Blighted Areas.
- A new application level is available for projects with as little as $250,000 investment and five new employees located in an Economic Redevelopment Area.