This year’s Legislative session is behind us and there has been quite a bit of activity especially these past few days. Below is a summary of what happened with the bills that we were tracking:

LB 888 Corporate Tax Relief Signed by Governor

On Wednesday, April 9, Governor Heineman signed into law a bill to provide corporate tax relief to Nebraska businesses. Approved by state senators on April 7 by a vote of 48-0, LB888 adjusts the state’s corporate tax brackets for the first time in 26 years.

Nebraska’s corporate tax is comprised of two brackets: 5.58 percent and 7.81 percent. The new law raises the lowest corporate income tax bracket by $50,000, to a maximum of $100,000 annual income. That means a corporation can earn up to $100,000 per year and still be taxed at the lower rate of 5.58 percent. Earnings above $100,000 will still be taxed at 7.81 percent. According to media estimates, the new law will reduce Nebraska corporations’ income taxes by up to $1,120 per year. Before the enactment of LB888, Nebraska had claimed the second-highest nominal rate among surrounding states with a corporate income tax.

LB888 was one of the priority bills for the State Chamber. Earlier this year, the State Chamber presented testimony in support of the legislation, stating that the bill was needed to enhance Nebraska’s business climate and address the issue of “bracket creep.” LB888 was introduced by Senator Carroll Burling of Kenesaw. It was co-sponsored by Senators Tim Gay of Papillion and Pete Pirsch of Omaha, and prioritized by Senator Scott Lautenbaugh of Omaha. The law is operative for tax years beginning on or after January 1, 2008.

LB 819 Expanding Workers Compensation

The Legislature passed the expansion of workers compensation for first responders to make a claim for mental injury. Passage of this bill will increase premiums for all business plus has the potential to expand mental injury claims to other employee groups. This bill, which had not made it out of the General File as LB 1082, was attached to a non-controversial Labor Department legislation. We wait to see if the Governor will sign it.

LB 204 Contractor Registration

On February 7 Governor Heineman signed LB204 amending the requirements for contractor registration. The new legislation requires all contractors in Nebraska to register with the Department of Labor if they earn $5,000 or more annually and are not performing work on their own property. The registration excludes contractors who install water wells or septic systems. The registration fee is now $40 instead of $25. A contractor does not need to register if he/she is self-employed and does not spend more than $3,000 annually to hire workers. For that exemption the contractor must file an affidavit with the Department along with a list of employees it has hired in the previous year with their dates of employment.

LB 1001 Energy Grants Available and Change Withholding Provisions for Independent Contractors

On April 17, the Governor signed this legislation. The main objective of the bill is to allow electric utilities to opt into a program to provide grants for low income residents to make energy conservation improvements to their homes through the use of grants funded by sales and use tax received from the utility and matched from the utility’s own funds. LB1001 also exempts from sales tax the energy-saving improvements that are funded by the program.

It also amends the income tax withholding statute, adding a new 5-percent withholding requirement for any contractor making payments of more than $600 for construction services to a contractor or a person that is not an employee. This requirement would not apply if the payee is registered under the Contractor Registration Act

LB 1004 Withholding Requirements Changed

The Governor signed this bill which lowers the mandatory income tax withholding on employees from 3 percent to 1.5 percent for employers who employ 25 or more.

LB 1015 Worker’s Compensation and Contributory Negligence

It was not passed out of Judiciary Committee. This measure would have had a judge or jury ignore the contributory negligence of an employer in actions in which an injured employee is seeking recovery from a negligent third party, since recovery against the employer is precluded in a civil action due to the “exclusive remedy” doctrine under workers’ compensation law

LB 1016 Employee Classification for Contractor

This bill, referred to Business and Labor Committee, was not passed out of it. It penalized employers for misclassifying employees. It also had provision to ensure that employees were legal immigrants.

LB 1073 Paid When Paid

This was not passed out of Business and Labor Committee. The bill would have required an owner to pay a contractor within 30 days after getting a bill for work done in accordance with a contract and require a contractor to pay a subcontractor within 10 days of the contractor’s payment.

LB 1175 Income Tax Withholding

This bill was indefinitely postponed on March 17. It would have required Nebraska employers to deduct and withhold 5 percent from wage payments over $600 and for construction services to non-employees who are not subject to withholding under the Internal Revenue Code

Paula Siewert, CAE
President
Northwestern Lumber Association
800-469-9078

(Legislative information provided by Nebraska State Chamber of Commerce)