LINCOLN - A comprehensive reworking of state taxes, proposed by a coalition of business groups called Blueprint Nebraska, will probably have to wait another year to get off the ground. Following a hearing that featured the CEO of Union Pacific Railroad and representatives from the Nebraska and Omaha chambers of commerce, the top tax senator for the State Legislature described the Blueprint proposal as needing more work.

State Sen. Lou Ann Linehan of Elkhorn chairs the legislative committee that handles tax issues. Linehan said "pieces" of the Blueprint plan match current priorities, including reducing the tax rate for the top state income bracket, but the overall proposal could use more study.

Even the head developer of the Blueprint Nebraska tax plan, former Sen. Jim Smith, acknowledged it is probably too late to get such a comprehensive proposal prioritized, debated, and passed. As of February 25, there are 28 days left in the 60-da legislative session.

“Whether it’s this year or ’23, we think that this approach is what’s needed if we want to compete,” Smith said. “This bill is what tax modernization looks like.”

Legislative Bill 1264, introduced by Omaha Sen. Mike McDonnell, has been in development since 2018. Supporters believe this to be essential if Nebraska wants to become more competitive tax-wise, attract more workers, and increase its population. LB1264 combines state income tax cuts with a broadening of the sales tax base to include more services that are not currently taxed. It also contains programs to forgive student loans in an effort to attract highly skilled workers. Sales tax collections would rise by $2 billion over 10 years, which would allow for cuts in property taxes under the plan.

Nebraskans who earn less than $50,000 would no longer pay state income taxes under the plan in an effort supports say is to lure more workers to Nebraska.

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