On May 31, 2023, the Nebraska Governor signed two bills that enact major tax reforms in the state. The first bill grants more property tax relief to Nebraskans—establishing a three percent annual cap on how much school districts can increase property tax requests. It also eliminates community college property taxes and beefs up a tax credit that offsets the cost of property taxes. The second bill reduces the individual and business income tax rate to 3.99% from 5.84% and 7.25%, respectively.

The tax cuts come at an opportune time, with high inflation making it hard for many Americans to afford basic goods such as gas, groceries, and electricity. These new laws will help Nebraskans cope with higher prices and allow them to keep more of their hard-earned money. The Platte Institute, an organization that advances policies that improve the lives of Nebraskans, played a key role in passing this historic tax reform package. For years, the Institute has worked to reform Nebraska’s tax code. Through research, blog posts, media placements, and outreach to lawmakers, Platte explained how tax reform can help individuals and businesses in the state. Their efforts proved successful at the end of May, when the governor signed LB243 and LB754.

The Platte Institute noted these pro-growth tax packages mark a new era for Nebraska, making the state more competitive and offering tax relief to its citizens. The Nebraska Governor added the bills “bring transformational tax reform for Nebraskans and provide billions in property, business, and income tax relief for Nebraska businesses, farmers, ranchers, and taxpayers.”

The Income Tax Revolution Rolls on in the States

Nebraska joins several other states that have cut their income tax rates in 2023, including West Virginia, North Dakota, Montana, and Kentucky. Ohio and Wisconsin may join that list in the coming months.

In a recent op-ed for National Review, Michael Lucci, a Visiting Economic Policy Fellow at State Policy Network, noted: “Strong state revenue made the recent wave of tax cuts possible. Changes in federal tax law enacted in 2017, and the rise of remote work following the pandemic—that allows workers to move to better-managed, lower-tax states—gave lawmakers the further incentive to act, resulting in unprecedented interstate tax competition.”

Related Reading:

Governor Pillen Signs Historic Tax Cuts Package
Office of the Governor

Strong Revenue and Fiscal Federalism Are Driving a State-Based Tax Revolution
National Review

States Should Compete Within America’s Highly Progressive Tax And Redistribution System
Platte Institute