The business/government partnership is alive and well in Nebraska. Emphasizing the state's ongoing commitment to vibrant economic growth, the Legislature has passed a series of groundbreaking laws designed to make Nebraska an even better place to do business.
Nebraska Advantage Act
The Nebraska Advantage Act is designed to provide businesses with a meaningful incentives package to reduce their taxes on income, sales, withholding and personal property for up to 10 years.
Nebraska's principal incentive package consists of several components: Nebraska Advantage, Nebraska Rural Advantage Levels One and Two, Nebraska Customized Job-Training Advantage, Nebraska Research and Development Advantage, and Nebraska Microenterprise Tax Credit Advantage.
Nebraska Advantage package benefits include:
- Investment credits
- Wage credits
- Sales tax refund
- Customized job training
- State and local sales tax exemptions for purchases of manufacturing machinery, equipment and related services
- Research and development tax credits
- Microenterprise tax credits
- Inventory tax exemptions
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Expand or grow your business in Nebraska, and see how it will positively impact your bottom line.
Sales and Local Sales Tax Exemptions
Nebraska provides state and local sales tax exemptions on purchases of manufacturing machinery, equipment and related services. Manufacturing machinery and equipment is defined to include:
- Equipment for transporting raw materials or components
- Molds and dies for forming cast or injected products or its packaging materials
- Machinery to maintain the integrity of the product or environmental conditions
- Testing equipment for quality control
- Computers that control a manufacturing process
- Machinery used to produce steam, electricity, catalysts, and solutions
- Repair or replacement parts
- All installation, repair and maintenance service performed on such equipment
Nebraska Research and Development Advantage
Offers a tax credit for research and development activities undertaken by any business entity. The credit is equal to 3% of research and development expenditures that are greater than the average of the previous two years of research and development spending. An important feature: Businesses with little or no income may take advantage of the tax credit by receiving a sales tax refund or a refundable income tax credit.
Nebraska Microenterprise Tax Credit Advantage
Provides a 20% refundable investment tax credit to micro-businesses on new investment in targeted communities. Applicants may qualify for a minimum $10,000 throughout the life of the program. The credit is geared to companies with five or fewer employees, including start-ups.
Credits are approved through an application process with the Nebraska Department of Revenue and evaluated on expected local economic impact. The credits would apply to new expenditures for wages, buildings and non-vehicle depreciable personal property. To view the application: Microenterprise Development Fund Enhancement
Additional Tax Benefits
Other aspects of state tax law that provide positive investment factors for businesses include:
- No property tax on business inventories, including raw materials, goods in process and finished goods.
- No tax on intangibles.
- Sales tax refund for pollution-control equipment.
- No sales or use tax on ingredients used in manufacturing or processing of a product destined for ultimate retail use.
- Sales tax exemption on sales of common carrier vehicles and replacement parts to recognized common carriers.
- No sales tax on water used to irrigate agricultural land or in manufacturing.
- For firms engaged in international commerce, Omaha has an established general-purpose "foreign trade zone." Businesses may exhibit, store and assemble goods, use them in manufacturing, or otherwise process goods within the zone, and defer paying duties until the goods enter U.S. Customs territory from the zone. If these goods are exported, no duty or excise taxes are due.
- Purchases of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, coke, nuclear fuel, and butane are exempted from sales and use tax when more than 50 percent of the amount purchased is used directly in the processing, manufacturing, or refining of tangible property, or in the generation of electricity.
- Personal property tax depreciation schedules permitting full, 100% depreciation for property tax assessment purposes.
Capital Gains Exemption
Nebraska law provides for a one-time exemption from state personal income tax on gains realized from selling or exchanging the stock of a corporation acquired by an employee with that corporation. The corporation must have done business in Nebraska for at least three years, and must have a minimum of five shareholders.
This provision is of major value to growth-oriented companies that use company stock options as part of employee compensation or retirement programs, thus providing a company with an attractive recruiting device.
Angel Investment Tax Credit
The Angel Investment Tax Credit encourages investment in high-tech and other startup Nebraska enterprises by helping attract private funding. The tax credit is refundable and available to a wide range of industries, making Nebraska’s Angel Investment Tax Credit one of the most competitive in the nation. For more information: Angel Investment Tax Credit
Community Improvement Financing
Community Improvement Financing (CIF), Nebraska's version of tax increment financing, is a method of financing public improvements associated with a private development project in a blighted area by using the projected increase in the property tax revenue resulting from the private development. This tax revenue increase is used to pay for the public improvements or is pledged to repay bonds issued by the local government or loans used to finance these improvements.
In effect, CIF can reduce developer capitalization to a level that makes investment feasible. Revenue bonds can be issued to finance all or part of a site's public pre-construction improvements. Public improvements include land purchase, clearance and sale, construction of streets, sidewalks, utilities, parks or other similar public spaces necessary in site preparation.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC), administered by the Nebraska Department of Labor, provides a credit against federal income tax liability of up to $2,400 for each qualified person hired.
For those employees working 400 hours or more, the credit is 40% of the first $6,000 in wages. For those employees working less than 400 hours but at least 120 hours, the credit is 25% of the first $6,000 in wages. Also, 16- and 17-year-old summer youth employees who are residents of a federally designated Enterprise Zone are eligible for WOTC benefits on the first $3,000 of wages.
Categories of workers eligible for WOTC benefits include Enterprise Zone residents, members of families that have received Aid to Families with Dependent Children or Temporary Assistance for needy families, low-income veterans, 18- to 24-year-old food stamp recipients, 16- and 17-year-old residents of federally designated Enterprise Zones hired for summer employment, disabled persons who have completed or are completing rehabilitative services, low-income ex-felons and persons who have received Supplementary Security Income (SSI). For more information: Work Opportunity Tax Credit
Nebraska Customized Job-Training Advantage
Provides a flexible and discretionary job-training program that offers $500-$4,000+ per job, depending on the financial investment, number of jobs being created, types of jobs, training being provided and by whom, and geographic considerations.
You can design your own training, or a statewide training team can assist with the training needs assessments, training plans, curriculum development and training instruction.
For more information: Nebraska Customized Job-Training Advantage.
The Intern Nebraska Program helps businesses create and fund new internship positions for college and university students to gain job experience while working with companies across the state. Grants awarded may be up to 50% of the cost of the internship for eligible projects, up to $5,000 per internship.
Businesses that hire students receiving federal Pell Grants may provide a supplemental application and may be awarded a grant of up to 75% and an additional $2,500 per internship. Businesses may be awarded up to five interns per location and up to 10 companywide per grant fiscal year. For more information: Intern Nebraska
Nebraska Worker Training Program
The Nebraska Worker Training Program (WTP), administered by the Department of Labor, provides grants to established businesses to fund training projects for existing workers in the state.
Grants are distributed based on the following.
- Size of business:
40% to small businesses with less than 100 employees
40% to medium to large businesses with 100 or more employees
20% to employer demonstration projects
- Type of industry
- Geographic location
- Number of demand-occupations that benefit the economy and broaden the worker skill-pool
Established, for-profit businesses that contribute to the State Unemployment Insurance Trust fund are eligible for the program (except employee-leasing firms). Businesses provide matching contributions equal to or greater than the grant funds requested. For more information: Nebraska Worker Training Program
Community Development Block Grants
The Community Development Block Grant Program is geared toward business development that creates jobs. This loan program mixes interest rates to reduce the financing costs of the participating business.
A beneficial interest rate is created with the involvement of a local bank and a federal loan guarantee program. These direct loans or loan guarantees can be used for fixed assets, real estate and working capital for projects. For more information: Community Development Block Grant
Site and Building Development Fund
The Site and Building Development Fund provides funding to create industrial-ready, available sites and buildings. For more information visit: Site and Building Development Fund
Small Business Innovation Research (SBIR) Program
The objectives of this federal program are to stimulate technological innovation, help small businesses meet federal government research and development needs, encourage participation of minority and disadvantaged persons, and increase private sector commercialization of federal research and development (R&D) projects.
Grants are provided through 11 federal agencies having research and development budgets of more than $100 million and are awarded to projects meeting the research needs of these agencies. Funding agencies include the departments of Agriculture, Commerce, Defense, Education, Energy, Transportation, and Health and Human Services, as well as the Environmental Protection Agency.
Funding is provided in two phases. In Phase I, companies may use funds to evaluate and demonstrate the technical feasibility of a project. Phase I research efforts are typically six months in duration and awards do not normally exceed $100,000. In Phase II, funding is to be used to continue development of the technology and include the principal R&D effort. Phase II grants are typically 24 months in duration and generally do not exceed $750,000.
To be eligible for an SBIR grant, a company must meet all of the following criteria:
- No more than 500 employees, including affiliates.
- A for-profit organization.
- Located in the United States.
- At least 50% owned and controlled by U.S. citizens or lawfully admitted permanent residents.
Nebraska’s Business Innovation Act
Nebraska Small Business Innovation Research (SBIR) Initiative
Provides financial assistance to small businesses maintaining a principal place of business in Nebraska. The initiative supports applications to the federal Small Business Innovation Research Program (Phase 0) and subsequent successful federal Small Business Innovation Research program applications (Phase 1 and 2).
Nebraska Innovation Fund
Provides financial assistance to individuals and businesses operating in Nebraska to support proof of concept activities and commercialization of products or processes
Nebraska Research and Development Program
Provides Nebraska businesses with the opportunity to partner with the state of Nebraska, and Nebraska colleges and universities to fund research and development activities that lead to new or better products, processes and innovations that, without state assistance, may not occur.
Nebraska Microenterprise Assistance Program
Provides technical assistance to Nebraska microenterprises located in distressed rural and urban areas to better assure their full potential to create jobs, enhance entrepreneurial skills and activities, and increase low-income households' capacity to become self-sufficient. For more information on these programs: Business Innovation Act
Nebraska Progress Loan Fund
The Nebraska Progress Loan Fund (NPLF) makes loans to qualifying small businesses, generally representing existing and start-up businesses. The minimum loan to any business is $50,000, with a maximum of $2 million.
The NPLF also can apply for interim loans to qualifying small businesses for a term not to exceed three years. An interim loan maximum amount is $5 million, with longer terms negotiated on a case-by-case basis. Funding must be matched one-to-one by private sources. For more information: Nebraska Progress Loan Fund
LB 840: Local Option Municipal Economic Development Act
The Local Option Municipal Economic Development Act (LB 840, 1991) authorizes incorporated cities and villages to collect and appropriate local tax dollars (sales and/or property tax) if approved by the local voters, for economic development purposes.
Greater Omaha Foreign Trade Zone No. 19
United States Department of Agriculture – Nebraska Grants and Programs
United States Department of Agriculture (USDA) provides funding opportunities for rural small businesses through loans, loan guarantees, and grants. For more information: Nebraska Grants and Programs