LINCOLN — A major proposal to cut state income tax rates and corporate income tax rates moved forward in the Nebraska Legislature Thursday, but only after its chief sponsor agreed to work on a compromise.

Legislative Bill 939, introduced by State Sen. Lou Ann Linehan of Elkhorn, would reduce the state’s top income tax rate over three years from 6.84% to 5.84%. The state’s corporate income tax rate would also drop from 7.1% to 5.84% by tax year 2026. The bill is a top priority for Gov. Pete Ricketts and for the Nebraska Chamber of Commerce and other business groups, who argue that the top income tax rate — higher than all neighboring states except Iowa — makes the state unattractive for business.

But opponents of the bill, led by Lincoln Sen. Matt Hansen, argued that more than half of Nebraska taxpayers would get no tax reduction from LB 939. He also said that it is unfair that the most wealthy 1% of Nebraskans earn half of the state’s income but pay only 10% of the income taxes.

The state economic forecasting board will make a new prediction Monday on expected state tax revenue, which Linehan said will help determine whether the income tax cut is affordable. The fiscal note on LB 939 estimated that it would lower state tax collections by $365 million for the individual income tax cuts alone when fully implemented. That figure caused some senators to question whether the state would be able to fund state services if the full tax cut was enacted. When asked what amendments might be needed, Linehan said the tax cut may have to be spread out over more years.

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