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Nebraska Local Sales Tax Bill Passes Legislature


UPDATE: 4/18/2012 Even though Governor Heineman vetoed the bill, the Legislature voted 30-17 to override his veto. The vote was barely enough to override.

Nebraska Legislative Bill 357 regarding the amount of local sales and use tax that can be imposed has passed the Nebraska legislature, but according to Tax Analysts, its enactment is still undetermined.  Americans for Prosperity Nebraska have moved to request that individual taxpayers “… tell the Governor to veto this sales tax increase….”

The bill passed on Final Reading 30-15-4 and was presented to the Governor on April 5. The bill amends the sales and use tax law to allow local governments to apply up to 2 percent local sales tax in quarter percent increments. The current cap on local sales and use taxes is one and one-half percent. The uses for the sales tax are dictated by the bill and the ability to apply is determined by municipality size.

Anything over the first “…one and one-half percent shall be used as follows:

In a city of the metropolitan class, the proceeds from the first one-quarter percent of the rate greater than one and one-half percent shall be used to reduce other taxes, the proceeds from the next one-eighth percent of the rate greater than one and one-half percent shall be used for public infrastructure projects and the proceeds from the next one-eighth percent of the rate greater than one and one-half percent shall be used for purposes of the interlocal agreement  or joint public agency agreement…

In a city of the primary class, up to fifteen percent of the proceeds from the rate in excess of one and one-half percent may be used for non-public infrastructure projects of an interlocal agreement or joint public agency agreement with another political subdivision within the municipality or the county in which the municipality is located, and the remaining proceeds shall be used for public infrastructure projects or voter-approved infrastructure related to an economic development program…

In any incorporated municipality other [than these]…the proceeds from the rate in excess of one and one-half percent shall be used for public infrastructure projects or voter-approved infrastructure…”

The bill continues to define infrastructure and put a time limitation on the sales tax increases. In addition, it dictates that the following information must be provided when asking the voters to approve a local sales and use tax increase:

  • The percent of the increase being requested;
  • A list of reductions or eliminations of other taxes that will apply;
  • A description of projects to be funded by the revenue collected; and
  • Time frame for the sales tax increase.

In order for a local sales tax increase to be approved, “[t]he question shall be submitted upon an affirmative vote by at least seventy percent of all the members of the governing body of the incorporated municipality.”

NOTE: Earlier in this legislative session LB 956 was submitted, but provides for the same local sales tax increase and seems to be dead in the legislature at this time. At the time of our previous blog, local leaders were supportive of the measure.

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Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”