State Sen. Brian Hardin of Gering is pushing to correct an issue in Nebraska’s property tax law that he says unintentionally put a financial strain on taxpayers.
During a Revenue Committee hearing on Wednesday, Hardin explained that LB34, passed during the 2024 Special Session, changed how property tax credits are applied. Instead of requiring property owners to claim a deduction, the law was supposed to grant an automatic tax credit. However, it inadvertently left out the 2024 tax year, meaning most Nebraskans filing taxes this year won’t receive a refundable credit to offset property taxes.
“By failing to include the 2024 tax year in the property tax credit, we placed an additional financial strain on families, farmers, and small business owners across our state,” Hardin said.
His proposed bill, LB81, aims to fix the issue.
However, some lawmakers raised concerns about whether the bill could lead to people “double dipping” into the tax credit. Hardin said he is open to amendments to prevent that from happening.
If passed, the Nebraska Department of Revenue estimates the change would cost the state’s General Fund over $635 million between fiscal years 2025 and 2027. Opponents argue that the bill comes at a time when Nebraska is already facing a projected $432 million budget shortfall.
“Revenue reductions imposed by this bill will make the already-negative ending balance even more negative, and its enactment will likely necessitate cuts to General Fund spending,” said Dr. Rebecca Firestone, executive director of the OpenSky Policy Institute. “As a quick reminder, 90 percent of General Fund spending supports education, health care, and public safety.”
State Treasurer Tom Briese also acknowledged concerns about the state’s fiscal outlook, saying that while lawmakers are looking at property tax relief options, budget constraints may limit the scope of any tax changes this year.
“There are some bills there to help us do that,” Briese said. “How big of a step can we take this year? With the budget the way it is, with the fiscal picture the way it is, it’s going to have to be a little smaller bite of the apple this year.”
Additionally, the Department of Revenue estimates Hardin’s bill would cost the state more than $4 million to process amended returns and provide taxpayer support services.
Nebraska News will continue to follow developments on this bill.
