(August 28, 2014 – Omaha, Nebraska) Nebraska offers an extremely valuable income tax credit to businesses that demonstrate growth over two tax years. This credit, unlike most incentive credits, is directed exclusively at very small businesses. The credit is 20% of the new investment or new employment over a two-year period. The total lifetime credits available to any single taxpayer or any related persons is $10,000. For each year through 2015 the legislature has set aside $2 million for this credit.
In order to be eligible, the taxpayer must be actively engaged in the operation of a microbusiness with personal involvement on a continuous basis in the daily management and operation of the business. The business must employ 5 or fewer full-time equivalent Nebraska residents on the date of the application. There are limitations on which farm operations qualify for the credit. The applicant must use E-Verify, a federal electronic employment verification program.
Growth in investment is measured by the increase in spending for equipment or facility over the base year (the year prior to the application). This includes purchase of equipment, repairs of equipment and facilities, increase in lease obligation, advertising and legal and professional fees. Growth in employment is measured in increase in wages and health insurance paid. There are upper limits on the amount of wages that can be taken into account.
Note that virtually any business that is starting up and will be employing less than 5 full-time equivalents has an excellent chance of qualifying. Also of note is that this is a refundable credit, which means you do not have to pay income tax to receive the benefit. This is significant because although many start-up businesses do not have a profit and, therefore, have no tax liability, they can receive the credit as a grant rather than just as an offset to future taxes.
You can find more information about this credit at:
or call Rand Hansen in our office at (402) 330-7008