The business/government partnership is alive and well in Nebraska. Emphasizing the state's ongoing commitment to vibrant economic growth, the Legislature has passed a series of groundbreaking laws and programs designed to make Nebraska an even better place to do business.
Tax Incentives - ImagiNE Nebraska Act
The ImagiNE Nebraska Act is a comprehensive economic development incentive package that meets the needs of businesses expanding or relocating to Nebraska. This incentive package provides 4-7% investment credits, 4-9% wage credits and direct sales/use tax refunds to qualified businesses, based on job creation and investment levels. For more detailed information, go to to imagine.nebraska.gov.
Sales and Local Sales Tax Exemptions
Nebraska provides state and local sales tax exemptions on purchases of manufacturing machinery, equipment and related services.
Manufacturing machinery and equipment is defined to include:
- Equipment for transporting raw materials or components
- Molds and dies for forming cast or injected products or its packaging materials
- Machinery to maintain the integrity of the product or environmental conditions
- Testing equipment for quality control
- Computers that control a manufacturing process
- Machinery used to produce steam, electricity, catalysts, and solutions
- Repair or replacement parts
- All installation, repair and maintenance service performed on such equipment
[Confirm this replaces Nebraska Advantage Act]
Nebraska Research and Development Advantage
The state offers a tax credit for research and development activities undertaken by any business entity. The credit is equal to 3% of research and development expenditures that are greater than the average of the previous two years of research and development spending. An important feature: Businesses with little or no income may take advantage of the tax credit by receiving a sales tax refund or a refundable income tax credit.
Nebraska Microenterprise Tax Credit Advantage
Provides a 20% refundable investment tax credit to microbusinesses on new investment in targeted communities. Applicants may qualify for a minimum $10,000 throughout the life of the program. The credit is geared to companies with five or fewer employees, including start-ups. Credits are approved through an application process with the Nebraska Department of Revenue and evaluated on expected local economic impact. The credits apply to new expenditures for wages, buildings, and non-vehicle depreciable personal property.
Additional Tax Benefits
Other aspects of state tax law that provide positive investment factors for businesses include:
- No property tax on business inventories, including raw materials, goods in process, and finished goods
- No tax on intangibles
- Sales tax refund for pollution-control equipment
- No sales or use tax on ingredients used in manufacturing or processing of a product destined for ultimate retail use
- Sales tax exemption on sales of common carrier vehicles and replacement parts to recognized common carriers
- No sales tax on water used to irrigate agricultural land or in manufacturing
- For firms engaged in international commerce, Omaha has an established general-purpose "foreign-trade zone." Businesses may exhibit, store, and assemble goods, use them in manufacturing, or otherwise process goods within the zone, and defer paying duties until the goods enter U.S. Customs territory from the zone. If these goods are exported, no duty or excise taxes are due.
- Purchases of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, coke, nuclear fuel, and butane are exempted from sales and use tax when more than 50 percent of the amount purchased is used directly in the processing, manufacturing, or refining of tangible property, or in the generation of electricity.
- Personal property tax depreciation schedules permitting full, 100% depreciation for property tax assessment purposes.
Capital Gains Exemption
Nebraska law provides for a one-time exemption from state personal income tax on gains realized from selling or exchanging the stock of a corporation acquired by an employee within that corporation. The corporation must have done business in Nebraska for at least three years, and must have a minimum of five shareholders.
This provision is of major value to growth-oriented companies that use company stock options as part of employee compensation or retirement programs, thus providing a company with an attractive recruiting device.
Tax Increment Financing
Tax increment financing (TIF), is a method of financing public improvements associated with a private development project in a blighted area by using the projected increase in the property tax revenue resulting from the private development. This tax revenue increase is used to pay for the public improvements or is pledged to repay bonds issued by the local government or loans used to finance these improvements.
In effect, TIF can reduce developer capitalization to a level that makes investment feasible. Revenue bonds can be issued to finance all or part of a site's public pre-construction improvements. Public improvements include land purchase, clearance and sale, construction of streets, sidewalks, utilities, parks, or other similar public spaces necessary to site preparation.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC), administered by the Nebraska Department of Labor, provides a credit against federal income tax liability of up to $2,400 for each qualified person hired.
For those employees working 400 hours or more, the credit is 40% of the first $6,000 in wages. For those employees working fewer than 400 hours but at least 120 hours, the credit is 25% of the first $6,000 in wages. Additionally, 16- and 17-year-old summer youth employees who are residents of a federally designated Enterprise Zone are eligible for WOTC benefits on the first $3,000 of wages.
Categories of workers eligible for WOTC benefits include:
- Enterprise Zone residents
- Members of families that have received Aid to Families with Dependent
Children or Temporary Assistance for needy families
- Low-income veterans
- 18-to 24-year-old food stamp recipients
- 16- and 17-year-old residents of federally designated Enterprise Zones hired for summer employment
- Disabled persons who have completed or are completing rehabilitative services
- Low-income ex-felons and persons who have received supplemental security income (SSI).
Community Development Block Grants
The Community Development Block Grant Program is geared toward business development that creates jobs. This loan program mixes interest rates to reduce the financing costs for participating businesses.
Local banks and federal loan guarantee programs work to create this cost-effective interest rate. These direct loans or loan guarantees can be used for fixed assets, real estate, and working capital for projects. For more information, please visit Community Development Block Grant
Site and Building Development Fund
The Site and Building Development Fund provides funding to create industrial-ready, available sites and buildings. For more information visit: Site and Building Development Fund
Small Business Innovation Research (SBIR) Program
This federal programs works to stimulate technological innovation, help small businesses meet federal government R&D needs, encourage minority and disadvantaged participation, and increase private sector commercialization of federal R&D projects.
Grants are provided through 11 federal agencies with research and development budgets over $100 million and are awarded to projects meeting the research needs of these agencies. Funding agencies include the departments of Agriculture, Commerce, Defense, Education, Energy, Transportation, and Health and Human Services, as well as the Environmental Protection Agency.
Funding is provided in two phases. In Phase I, companies may use funds to evaluate and demonstrate the technical feasibility of a project. Phase I research efforts are typically six months in duration and awards do not normally exceed $100,000. In Phase II, funding is used to continue development of the technology and include the principal R&D effort. Phase II grants are typically 24 months in duration and generally do not exceed $750,000. For more information visit: Small Business Innovation Research (SBIR) Program
To be eligible for an SBIR grant, a company must meet all of the following criteria:
- No more than 500 employees, including affiliates
- A for-profit organization
- Located in the U.S.
- At least 50% owned and controlled by U.S. citizens or lawfully admitted permanent residents
Nebraska Small Business Innovation Research (SBIR) Initiative
Provides financial assistance to small businesses maintaining a principal place of business in Nebraska. The initiative supports applications to the federal Small Business Innovation Research Program (Phase 0) and subsequent successful federal Small Business Innovation Research program applications (Phases 1 and 2).
Nebraska Innovation Fund
Provides financial assistance to individuals and businesses operating in Nebraska to support proof-of-concept work and commercialization of products or processes.
Nebraska Research and Development Program
Provides Nebraska businesses with the opportunity to partner with the state of Nebraska as well as Nebraska colleges and universities to fund research and development that leads to new or better products, processes, and innovations that, without state assistance, may not occur.
Nebraska Microenterprise Assistance Program
Provides technical assistance to Nebraska microenterprises located in distressed rural and urban areas to better assure their full potential to create jobs, enhance entrepreneurial skills and activities, and increase low-income households' capacity to become self-sufficient.
For more information on these programs, go here: Business Innovation Act
LB 840: Local Option Municipal Economic Development Act
The Local Option Municipal Economic Development Act (LB 840, 1991) authorizes incorporated cities and villages to collect and appropriate local tax dollars (sales and/or property tax), if approved by the local voters, for economic development purposes.
Greater Omaha Foreign Trade Zone No. 19
United States Department of Agriculture – Nebraska Grants and Programs
United States Department of Agriculture (USDA) provides funding opportunities for rural small businesses through loans, loan guarantees, and grants.
For more information: Nebraska Grants and Programs