The Nebraska Legislature is now more than one-third of the way through the 90-day legislative session. While there are many new faces around the Capitol, including 14 new state senators and new leadership in the Governor’s office, the biggest issues remain very familiar to Nebraska Farm Bureau. Tax relief and education funding reform are once again front and center in legislative discussions, and Nebraska Farm Bureau is geared up to build on the property tax relief it helped deliver in recent years.
From increased funding for the state’s Property Tax Credit Fund to establishing a refundable income tax credit for
property taxes paid to K-12 schools and adding tax relief based on property taxes paid to community colleges; NEFB’s advocacy efforts have provided significant property tax relief for Nebraskans. NEFB estimates its collective property tax relief efforts reduced property taxes by 20% for the owner of $250,000 home in 2022, while reducing property taxes by nearly 30% for Nebraska farms and ranches.
“Our Farm Bureau team worked diligently with the Legislature and former Gov. Ricketts to deliver meaningful
property tax relief for our members over the last several years. As we move onto a new chapter with Gov. Pillen and a new legislative body, we will continue to push for relief and reforms that not only reduce our overreliance on property taxes but make Nebraska a more tax friendly state,” said Mark McHargue, Nebraska Farm Bureau president.
While numerous bills have been introduced and public hearings are underway, much of the discussion has centered around Gov. Jim Pillen’s proposals to lower taxes and reform the way education is funded. Today, 60% of all property taxes collected in Nebraska are used to fund K-12 education while a majority of school districts receive little to no state equalization aid, in turn forcing property taxes to largely fund most schools.
Pillen’s education reform plan would invest more dollars in special education funding for K-12 schools, as well as invest additional dollars for new per-student aid to ensure the state takes on more responsibility for educating every public school student in Nebraska. The governor’s proposal would also initiate a “soft” cap on the amount of revenue that schools could collect as a means to help ensure tax relief.
“We think Gov. Jim Pillen’s investment in school funding and his property tax reduction initiatives are outstanding
because they would provide badly needed relief for farmers, ranchers and all Nebraskans who have faced decades of high property taxes. Farm Bureau’s long-standing policy favors reducing property taxes with state dollars to fund education. The key will be to make sure these greater financial investments translate into tax relief for taxpayers as intended,” said Bruce Rieker, NEFB’s senior director of state legislative affairs.
In addition to education funding reforms, Pillen has proposed several components for broader tax relief. Among them are measures to accelerate rate reductions for both personal and corporate income tax rates passed by the Legislature during the 2022 session, as well as fully exempt Social Security benefits from income tax. Another piece of the package would lower both personal and business income tax rates to 3.99% by 2027 to make Nebraska more competitive with neighboring states in relation to income taxes.
In terms of property tax relief, the governor’s proposal includes a threeprong approach that includes putting more money into the state’s Property Tax Credit Fund, using state dollars to replace property taxes to fund community colleges and enacting an income approach to valuing agriculture land.
“Lowering property taxes for our members remains our highest priority. As we move forward it will be imperative
that every new dollar invested in education translates to property tax relief, as well as ensures that every new dollar of income tax relief is matched by a new dollar of property tax relief,” said Rieker. “That is how we will be evaluating all the legislative bills and packages. The state has the money to do this. We continue to look forward to working with Gov. Pillen and our state senators to provide much needed tax relief and reforms for all property owners.”