- Like the individual income tax, the Corporate Income Tax
was enacted in 1967 and went into effect Jan. 1, 1968.
time, the rate was two percent of federal taxable income. In
1975, a two-tiered rate structure was enacted which imposed
one rate for corporate taxable income up to $25,000 and a higher
rate for incomes in excess of $25,000, and in 1982 this
separation point was increased to $50,000.
829 (1991) imposed a 15 percent surcharge on corporate incomes
greater than $200,000 for tax year 1991 only. This was
a combined rate of 8.98%. After the surcharge was
by the Nebraska Supreme Court in Bahensky v.
State, 241 Neb. 147 (1992), (for other reasons),
LB 1 (1992, Fourth Special Session) re-enacted the one-year
surcharge for tax year 1992 only.
- The Nebraska Corporate Income Tax uses federal taxable income
as its base. In cases where the corporation operates in
than one state, the total income of the multistate businesses
of the corporation must be apportioned among the states
the corporation operates those businesses. Through the mid
1980s, the income was apportioned by a three-factor formula
on the property in the state as compared to the property of
the corporation located in the U.S.; one-third on the
in the state as compared to payroll in the U.S.; and one-third
on the sales in the state as compared to sales in the
772 (1987), however, began to phase in a formula based on sales
alone. Since 1992, apportionment has been based on sales
(NEB REV. STAT. Section 77-2734.05 )
to 1995, sales delivered from a Nebraska location into a state
where such state is constitutionally prohibited from levying
an income tax on that corporation due to insufficient contacts
with that state were "thrown back" to Nebraska for
apportionment purposes. This "throw back" rule was
phased out from 1995 through 1997. Two-thirds of such sales
were thrown back in 1995, one-third in 1996, and beginning
in 1997, no sales have been thrown back to Nebraska.
under NEB. REV. STAT. Section 77-2734.06, all income is presumed
to be unitary. The taxpayer must show by a preponderance of
the evidence that income is not attributable to the unitary
business and is not apportioned in another state. Therefore,
Nebraska-based multi-state companies may accept the presumption
and apportion away part of its non-business income while out-of-state
businesses may exclude such income entirely by petitioning
the Tax Commissioner.
combination of variations from the Uniform Distribution
Income for Tax Purposes Act, (1) sales only apportionment,
(2) the lack of a throw back rule, and (3) apportionment
non business income make Nebraska one of the most favorable
states for corporate income tax of all states that have
tax. A recent study by Charles Swenson, a Leventhal research
fellow at the University of Southern California School of
Accounting found that Nebraska's overall effective tax
rate on business was 3.1%, second lowest in the
Only South Dakota was lower. In addition to the corporate
income tax, the study considered sales taxes, motor vehicle
taxes, unemployment taxes, excise taxes and document recording
studies are not as charitable to Nebraska's business tax climate.
However, no study seems to show that Nebraska's overall tax
burden on business is above average.
deductions and credits
significant exemptions, deductions or credits from the corporate
income tax are tax incentives for new or expanding businesses.
For 2006, credits under the Employment and Investment Growth
Act, quite often called by the bill number that enacted
it, LB 775 (1987) were $38.4 million. Also, an additional
million in credits were taken as refunds of sales taxes.
In 2006, the Nebraska Advantage Act replaced the Employment
and Investment Growth Act, but no data from that Act is available
yet. The Employment Expansion and Investment Incentive Act
(replaced by the Nebraska Advantage rural Development Act)
cost the state an additional $604,000 in used
credits for 2006.
The Quality Jobs Act and the Invest Nebraska Act have not
enough qualifiers to permit disclosure of the amount of
analysis and detail regarding Nebraska's tax incentive programs
may be found at "Major
Trends in Tax Policy - Economic Development Tax Incentives."
deductions from the corporate income tax base include a
for foreign income taxes that are in excess of the U.S.
rate ($9.4 million) and the carry forward or carry back
of a capital
or operating loss connected with Nebraska operations ($23.8
- Two rates are provided for the corporate income tax based
on the primary income tax rate. For taxable income up
the rate is 150.7% of the primary rate, and for income
in excess of $50,000, it is 211% of the primary
Currently, the rates are 5.58% and 7.81%. (NEB.
REV. STAT. Section 77-2734.02.)
and Disposition - The Nebraska Department of Revenue
administers the corporate income tax. Enforcement procedures
that are available
to the Department are the same as with regard to the individual
income tax. All proceeds go to the state's general fund.