Congress repealed personal exemptions in the federal tax overhaul and since Nebraska couples its state income tax system with the federal code, the repeal would increase the state tax liability of Nebraskans.
“We understand that we’re talking about 200 some million dollars of money that would have to come out of Nebraskans’ pockets in one way, shape, or form if we did nothing,” State Tax Commissioner Tony Fulton tells reporters during a briefing on Legislative Bill 1090.
The Ricketts Administration estimates the repeal of the personal exemption would increase the state income tax liability on Nebraskans by a total of $209 million in 2018, $220 million in 2019, and $232 million in 2020. Other changes in the federal tax code approved by Congress would add to the increased state tax burden on Nebraskans.
LB 1090 makes subtle, but significant changes to the state tax code to maintain the status quo.
“We were not going to take the Tax Cuts and Jobs Act and use it as the opportunity to raise taxes on Nebraskans,” according to Fulton.
The effect on corporate taxes is less certain. The administration plans no changes until the impact becomes clearer.
AUDIO: Brent Martin reports [:45]