The state of Nebraska will be ringing in 2006 with a new incentive package recently signed into law by Gov. Dave Heineman.
The new generation of benefits — dubbed the Nebraska Advantage Package — has been designed to enhance the state’s competitive edge by helping existing businesses expand and bringing new ventures to the state.
“It’s gratifying to know that this package addresses the needs of businesses and communities of every size, from fledgling entrepreneurs to large corporations and manufacturers, and will provide a more equitable playing field for small business,” Heineman said.
The incentive package adds to old incentives and updates legislation that has been in place for nearly 20 years.
Nebraska’s incentive program was in need of updating to remain competitive as a study completed in 2002 by KPMG showed, said Richard J. Baier, director of the Nebraska Department of Economic Development (DED).
“The new package improves Nebraska’s tax climate, includes more rural tiers, more thresholds to expand participation, new eligible industries and additional funding, such as job training, which was increased to $15 million for two years,” he said.
How exactly can expanding companies benefit from this new plan?
The Nebraska Advantage will reward businesses that invest in the state and hire Nebraska residents. In fact, companies stand to receive reduced or virtually eliminated corporate income and sales taxes. This translates into substantial financial savings.
“This new generation of incentives offers businesses more benefits for conducting their business in Nebraska and will positively impact their bottom line,” said Patty Wood, director of marketing and public relations for DED.
The long-term goals of the package are to promote economic growth through job retention and new capital investments; to increase the number of successful startup business ventures in the state; to foster the commercialization of new products and ideas; and to recognize and respond to the different needs of Nebraska’s many industries.
The package is set up on a five-tier system. The first tier encompasses the Nebraska Small Business Advantage, which affords incentives to companies that undertake a $1 million investment and create 10 new jobs (see box at lower left for a description of each tier).
Other components incorporated into the Nebraska Advantage include the Research and Development Advantage, Microenterprise Tax Credit Advantage, the Rural Development Advantage, and state and local sales tax exemptions on manufacturing machinery, equipment and related services.
“Each component of the package will help keep Nebraska’s economy strong through greater investment in businesses of all sizes and the work force of tomorrow,” Heineman said.
The Nebraska Advantage Act
Here’s a look at each tier of the state’s new incentive package.
Tier 1: Nebraska Small Business Advantage — $1 million of new investment and 10 new jobs. Companies under this tier can qualify for a refund of half of the sales tax paid for qualified property purchases at the project, a sliding scale wage credit and a 3 percent investment tax credit.
Tier 2: $3 million of new investment and 30 new jobs. Qualified companies can receive sales tax refunds for capital purchases for the project, the sliding scale wage credit and a 10 percent investment credit.
Tier 3: Jobs only tier. Companies receive the sliding scale wage credit for the creation of 30 new jobs. No capital investment is necessary.
Tier 4: $10 million in investment and 100 new jobs. In addition to the sales tax refund, jobs credit and investment credit, qualifying companies receive a personal property tax exemption for turbine-powered aircraft, mainframe computers, agricultural products, processing machinery and personal property used in a distribution facility for up to 10 years.
Tier 5: Investment only tier. Requires $30 million in new investment and no new jobs. Companies receive a refund of sales taxes paid on eligible property with the project.
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