LINCOLN — Additional property tax relief may be working its way into a bill designed to reduce state income taxes.

The development comes after the income tax proposal, Legislative Bill 939, advanced from first-round debate but only after the prime sponsor of the bill, State Sen. Lou Ann Linehan, promised to amend the bill before second-round debate. Linehan declined to comment on what amendments are being considered, but other sources claim that at least one of such amendments being discussed would provide more property tax relief.

Roughly $200 million in additional income tax relief could be produced by increasing the state income tax credits that provide a refund for property taxes paid for K-12 education. Nebraska's business community has long lobbied to cut the state's income tax rate. Business groups argue that Nebraska's top income tax rate discourages businesses and workers from locating here.

Currently, LB939 would reduce the state's top individual income tax rate from 6.84% to 5.84% after three years. Additionally, the state's corporate income tax rate would be reduced from 7.1% to 5.84% by the tax year 2026. The state's 6.84% top rate is the most among all neighboring states except for Iowa. However, Iowa Gov. Kim Reynolds recently signed a bill into law that establishes a flat tax of 3.9%.

Despite a 40-1 vote to advance from the first round of debate, there is strong opposition to LB939. Opposers voted "yes" on the condition that some compromises are made before it comes up for second-round debate.

Sen. Matt Hansen, who has led the opposition, has said his biggest issue with the bill is that it was claimed to be a "middle class" tax cut when in reality, most of the benefits go to the state's wealthiest taxpayers.

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