Nebraskas not claiming $200 million in state income tax credits, officials say

LINCOLN — Nebraskans are not claiming their refunds from a major tax relief passed by the state legislature, and Gov. Pete Ricketts joined other state leaders Thursday in urging Cornhuskers to stand up. take some.

About 40% of all Nebraskans this year did not claim the property tax refund that must be claimed on a state income tax form, leaving about $200 million in tax refunds unclaimed.

State Tax Commissioner Tony Fulton joined Governor Ricketts and State Senator Lou Ann Linehan in urging Nebraskans to make sure they claim a tax credit on income due to them.
(Paul Hammel/Nebraska Examiner)

‘A big deal’

It’s big money, Ricketts said.

For example, the owner of a $250,000 home in Lincoln could have claimed $1,137 in refunds this year from the income tax credit and another property tax relief effort from the State.

“It’s payment for the house,” Ricketts said at a news conference. “It’s a big problem.”

By next year, when 2022 income taxes are due, Nebraskanians should realize a 30% reduction in their property tax bill, the governor said — if they take advantage of the tax refund. ‘income tax.

Two programs to reduce the property tax

State lawmakers have launched two programs in recent years to reimburse Nebraskanians for traditionally high state property taxes, which are collected and paid locally: the Property Tax Credit, which appears on the property tax bill someone’s annual as an automatic reduction.

This long-term credit, the Department of Revenue announced Thursday, will be equivalent to a $213 reduction in the 2022 property tax bill for the owner of a $200,000 home. The credit on $200,000 of farm or ranch land will be approximately $256.

Then there is Nebraska’s new and larger property tax incentive law, passed in 2020. It provides a refundable tax credit on property taxes paid to support K-12 schools and, beginning in next year’s taxes, on taxes paid for community colleges.

This new tax relief must be claimed on a state income tax form — something only about 60% of Nebraskans do. It started with a 6% refund on 2020 income tax bills, but will increase to 30% in the 2022 tax year and is expected to increase through 2026.

Out-of-state taxpayers are unaware

Ricketts, along with state Senator Lou Ann Linehan and state tax commissioner Tony Fulton, said some Nebraska taxpayers are unaware of the need to file an income tax refund claim. , because it is still a new program.

“It takes time to sink in,” Fulton said.

Linehan added that people who live out of state and pay taxes here might not be aware of the tax credit.

When asked why the state doesn’t make tax relief automatic, like it did with the old property tax credit, Ricketts said it just isn’t that easy — the state is unaware of what ratepayers pay in local property taxes, for one, to calculate the refund.

“It’s the best way to do it,” the governor said.

State lawmakers opted for the income tax credit, rather than adding more money to the old automatic property tax credit, in part to make state tax relief more visible for taxpayers. The property tax credit, it was explained, was just one line on an annual form, and taxpayers didn’t realize it was state tax relief on local property taxes.

Linehan, who chairs the Legislature’s revenue committee, which guides state tax policies, said she may have a solution in mind, involving the inclusion of more information about whether to apply for the refund. state mail tax.

To get the income tax refund, you can either file an amended tax return for 2021 or claim any past refunds you may have earned on your tax return next year. Fulton said refunds can be requested for three years.

A “Nebraska Property Tax Search Tool” is available on the Ministère du Revenu website to help you calculate the credit owed to you. The website is also where taxpayers can find the forms needed to claim the credit.

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