Credits Against the Nebraska Individual Income Tax

019.01 Personal Exemption Credit . Beginning with the 1993 tax year, individuals are allowed a nonrefundable credit for each federal personal exemption allowed on the taxpayer's federal income tax return.

019.01A Indexing. The credit will be indexed by the method provided in Internal Revenue Code section 151 (IRC 151). 019.01B Higher income taxpayers. The credit will be reduced by five dollars, but not below zero, for every five thousand dollar increment of federal adjusted gross income (AGI) which exceeds a threshold. The threshold amounts will be adjusted for inflation by the method provided in IRC section 151. The Tax Commissioner shall provide a table for calculating the phase out of the credit.

019.02 Tax Paid to Another State . Nebraska resident individuals are allowed a nonrefundable credit for income tax they paid to another state or a local subdivision within another state. (See Reg-22-011).

019.03 Credit for Child and Dependent Care Expenses. A nonrefundable credit for Child and Dependent Care Expenses can be claimed by residents and partial-year residents. The credit is twenty-five per cent of the amount allowed on the federal return under IRC section 21. Taxpayers with AGI of twenty-nine thousand dollars or less can receive the credit under Reg-22-019.11.

019.03A A taxpayer whose federal credit is limited to his or her federal tax liability shall use the lesser amount when computing the Nebraska credit.

019.04 Credit for the Elderly or Disabled. Residents or partial-year residents may claim a nonrefundable credit for the elderly or disabled equal to one hundred per cent of the federal credit claimed under IRC section 22.

019.05 Community Development Assistance Act (CDAA) Credit . A nonrefundable credit may be claimed by individuals for contributions to approved projects of community betterment organizations under Chapter 13 of the Nebraska Revised Statutes.

019.05A The credit is allowed to any individual who or whose business firm has applied to the Department of Economic Development (DED) for authorization for a tax credit for a contribution to a certified program of a community betterment organization. This includes sole proprietors, partners of partnerships, members of limited liability companies, and shareholders of S corporations whose business has made the qualified contribution. DED may authorize a tax credit not to exceed forty percent of the total amount contributed by the business during its taxable year. 019.05A(1) The contribution must qualify as a charitable contribution under the Internal Revenue Code. 019.05A(2) A taxpayer claiming a CDAA credit must attach to his or her individual tax return a copy of the Statement of Nebraska Tax Credit, Form 1099NTC, received from DED that includes the amount of the credit granted by DED for the contribution made to the community betterment organization. 019.05A(3) Any tax credit may be carried over to the next five tax years immediately following the tax year in which the credit was first allowed.

019.06 . Nebraska Advantage Rural Development Act Credit . Individuals may claim a refundable credit if their business qualifies for such credit. Applications will be accepted for this credit on and after January 1, 2006. Taxpayers who submitted applications before January 1, 2006 under the Employment Expansion and Investment Incentive Act will receive any applicable credits under the rules and regulations of such Act.

019.06A. A taxpayer creating less than seventy-five percent of the jobs in the project agreement must repay one hundred percent of the job creation credits. In addition, a taxpayer creating less than seventy-five percent of the investment in the project agreement must repay one hundred percent of the investment tax credits.

019.07 Employment and Investment Growth Act Credit . Individuals may claim a nonrefundable credit if their business has a signed agreement with the Department of Revenue and qualifies for such credit.

019.07A Any income tax credit may be recaptured if the taxpayer fails to meet the required levels of employment or investment.

019.08 Wage Benefit Credit. Individuals may claim a nonrefundable credit for any wage benefit credit to which they are entitled under the Quality Jobs Act.

019.09 Income Tax Withholding. Individuals may claim a refundable credit for withholding.

019.10 Estimated Taxes. Individuals may claim a refundable credit for estimated taxes paid.

019.11 Refundable Credit for Child and Dependent Care Expenses. If federal adjusted gross income is twenty-nine thousand dollars or less, Nebraska residents or partial-year residents may claim a refundable credit for child and dependent care expenses equal to a percentage of the federal credit allowable under IRC section 21, whether or not the credit was limited by the federal tax liability.

019.11A The percentage of the federal credit allowed will be one hundred per cent if the taxpayer's federal adjusted gross income is not more than twenty-two thousand dollars. The percentage will be reduced by ten percent for each one thousand dollars, or fraction thereof, by which the reported AGI exceeds twenty-two thousand dollars. 019.11B Taxpayers filing for a refundable credit under Reg-22-019.11 may be required to attach a copy of the Child and Dependent Care Expenses, Form 2441 (Form 1040), or Child and Dependent Care Expenses, Schedule 2 (Form 1040A) filed with the Internal Revenue Service in order to document the credit that the taxpayer has claimed.

019.12 Nonhighway Use Motor Vehicle Fuel Tax Credit . For tax years through 2004, a taxpayer is entitled to the nonhighway use motor vehicle fuel credit on an individual income tax return in an amount determined under Reg-84-001 through Reg-84-006. This credit is refundable.

019.13 Refunds of Overpayment. Any overpayment of tax as a result of the refundable credits found in Reg-22-019.09 through Reg-22-019.12 will be refunded to the taxpayer upon filing a return and claiming the overpayment.

019.13A An overpayment of tax may be credited to the taxpayer's estimated tax for the following year if requested by the taxpayer on a timely filed return.

019.14 Nebraska Advantage Microenterprise Tax Credit . Individuals may claim a refundable credit if their business qualifies for such credit. Applications will be accepted for this credit on and after January 1, 2006.

019.15 Nebraska Advantage Act Credit . Individuals may claim a nonrefundable credit if their business has a signed agreement with the Department of Revenue and qualifies for such credit.

019.16 Nebraska Advantage Research and Development Act Credit. Individuals may claim a refundable credit if their business qualifies for such credit. Applications will be accepted for this credit on and after January 1, 2006.

019.17 Beginning Farmer Tax Credit . Individuals may claim a refundable credit on the Nebraska Individual Income Tax Return, if they qualify for such credit.

019.18 Nebraska Charitable Endowment Tax Credit . For tax years beginning on or after January 1, 2006, individuals may claim a nonrefundable credit for a percentage of planned gifts made to qualified endowments for charitable purposes. The credit may only be applied to the tax year in which the contribution is made.

019.18A A planned gift is an irrevocable contribution to a permanent qualified endowment using one of the following techniques authorized under the Internal Revenue Code of 1986, as amended: 019.18A(1) Charitable remainder trust (unitrust or annuity trust) that does not terminate or the beneficiaries interest in the trust is not assigned or contributed to the qualified endowment before the date of death of the beneficiaries or five years after the date of the contribution, whichever is earlier; 019.18A(2) Pooled income fund trust; 019.18A(3) Charitable lead trust (unitrust or annuity trust); 019.18A(4) Charitable gift annuity (current or deferred) contribution where the interest of the annuitants in the gift annuity cannot be assigned to the qualified endowment before the date of death of the annuitants, or five years after the date of the contribution; whichever is earlier; 019.18A(5) Charitable life estate agreement; or 019.18A(6) Paid-up life insurance policy. 019.18B A qualified endowment is a permanent, irrevocable endowment fund used for Nebraska charitable purposes and held by a Nebraska incorporated or established organization which is a tax-exempt organization under section 501(c)(3) of the Internal Revenue Code, or held by a Nebraska incorporated or established bank or trust company holding the fund on behalf of a Nebraska tax-exempt organization.

019.19 Financial Institution Shareholder Credit. A shareholder of a financial institution organized as an S corporation may claim a credit for the financial institution tax paid by the corporation. The credit must be distributed by the corporation to the shareholders in the same manner as the income of the corporation is distributed.

019.20 Biodiesel Credit. A taxpayer who invests after January 1, 2008 and before January 1, 2015, in a biodiesel facility that manufactures B100 will receive a nonrefundable credit. The credit is thirty percent of the investment. The investment must be at risk in the form of an ownership interest or right to receive dividends and must remain invested for at least three years. The credit is limited to ten percent of the allowable credit in the first two years of production, and fifty percent of the allowable credit in the third year. The credit cannot exceed more than fifty percent of the taxpayer’s liability and may be carried over for up to fifteen years after the investment was made.

019.21 Earned Income Credit. For the tax year beginning on or after January 1, 2006, qualified resident individuals may claim a refundable credit of 8% of the federal credit allowed under section 32 of the Internal Revenue Code. For tax years beginning on or after January 1, 2007, qualified resident individuals may claim a refundable credit of 10% of the federal credit allowed under section 32 of the Internal Revenue Code.

(Sections 77-2730 and 77-2791, R.R.S 2003, section 13-207, R.R.S. 2007, and sections , 77-2715.07, 77-2716.01, 77-27,188, 77-27,188.01, 77-27,188.02 77-27,228 through 77-27,234, and 77-4105, R.S.Supp 2008. February 22, 2009.)