Over the past couple months, you’ve likely heard a lot about the Tax Cuts and Jobs Act. This is the federal tax relief package passed by Congress and signed by President Trump late last year. This month, many Nebraskans will see the positive results of tax relief in their paychecks. The federal government has issued new tax withholding tables as they implement the federal tax cuts, and hardworking Nebraskans are taking home more of their income as a result.
These tax cuts would not have happened without the help of many great Nebraskans. Our entire federal delegation and many state officials supported the Tax Cuts and Jobs Act because it will help unleash economic growth in communities across our nation. I applaud Congress for their work.
Congress did the heavy lifting needed to get major federal tax relief pushed through. Due to changes in the federal tax code, however, Nebraskans may see a state tax increase unless the Legislature acts. Here’s why.
The Tax Cuts and Jobs Act eliminated the personal exemption and raised the standard deduction to help simplify the federal tax code. The personal exemption is a tax credit each taxpayer can claim on their taxes for themselves and each of their dependents. Here in Nebraska, we have a state-level personal exemption credit that was tied to the federal personal exemption.
Since Congress eliminated the federal exemption, our state level credit will go away starting in tax year 2018 unless the Legislature acts. With the personal exemption credit, you get a $134 tax credit from the state for each of your personal exemptions. If the Legislature doesn’t act, that means a family of four will potentially pay $536 more in state taxes this year. All told, Nebraskans would see an over $200 million tax increase next year unless senators pass LB1090.
Like many other states, Nebraska’s tax code has many references and ties to the federal tax code. When the federal tax code changes, many states have to adjust their tax code to avoid unintended consequences. That’s why Senator Jim Smith and I are working to get LB1090 passed. If Nebraskans want to continue to have the option of claiming the personal exemption credit on their state tax returns, the Legislature has to pass this bill.
While making these changes seems commonsense, there are a few senators who have talked about allowing this tax increase to happen. They want to take this money and spend it.
This session, my number one priority is balancing the budget without raising taxes. While we’ve been experiencing tough budget times, it’s important to remember the reasons state revenues have been down. Agriculture, the backbone of our state’s economy, has been experiencing low commodity prices. Raising taxes at a time when we should be doing everything to help grow our economy would be damaging to Nebraska families and our state as a whole.
Nebraska is already a high tax state. According to the Tax Foundation, Nebraska has the 11th highest property taxes in the United States and the 26th highest income tax rate. This makes us uncompetitive with surrounding states. Allowing this tax increase to happen, would set Nebraska even further back on tax competitiveness.
If you don’t want to see a tax increase happen, I urge you to contact your senator today. Their contact information can be found at www.NebraskaLegislature.gov. Ask them to vote “yes” on LB1090. If you have questions about federal tax reform or any other legislation, you are welcome to contact my office. We can be reached at 402-471-2244 or email@example.com.