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Nebraska Governor Would Eliminate Many Sales Tax Exemptions


 Nebraska Currently Exempts More Sales Tax Than It Collects.

In his recent State of the State Address, Nebraska Governor Dave Heineman (R) "focused on the need for tax reform." In his opinion, "[t]axes are too high in Nebraska. … and high taxes aren't attractive for entrepreneurial growth… ."

In addition, the governor would like to eliminate a number of sales tax exemptions. One proposal would "eliminate approximately $2.4 billion in sales tax exemptions," while the other would "eliminate approximately $395 million in sales tax exemptions."

The governor had two bills put before the legislature yesterday. Senator Beau McCoy and Senator Brad Ashford, who introduced the bills, say "Nebraska is ready for a debate on chaining the state's tax system… ."

Legislative Bill 405 would:

  • Eliminate Nebraska corporate income tax;
  • Eliminate Nebraska individual income tax;
  • Eliminate the tax on all retirement income; and
  • Eliminate 27 sales tax exemptions worth approximately $2.4 billion.

Legislative Bill 406 would:

  • Eliminate Nebraska corporate income tax;
  • "Lower income taxes on Social Security and other pension income;" and
  • Eliminate 9 sales tax exemptions worth approximately  $395 million.

The governor has said that the bills "demonstrate the different opportunities and challenges regarding tax reform." More sales tax exemptions create "a better opportunity to eliminate the individual income tax and the corporate income tax." On the other hand, he said, "When more exemptions are retained, that will prevent both the individual income tax and the corporate income tax from being eliminated."

According to the governor's website, Nebraska currently "exempts more in sales taxes than it collects." Annually, $1.5 billion is collected and $5 billion in sales taxes are exempted.

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.