Bryan Hunsberger
Nebraska Property Tax Relief -
It's Not All Good News.
If you got your Nebraska property tax statement in the mail this week, you might have noticed the total went down. Yes, this is a Christmas miracle, and no, you’re not dreaming. However, while the bill is lower, the amount you’re ultimately going to pay might not be. We’re working with governments and legislatures here, it’s never ALL good news.
Nebraska Property Tax Relief Explained
This past August, our Nebraska legislature passed “LB34 – Adopt the Property Tax Growth Limitation Act and the School District Property Tax Relief Act and change provisions relating to revenue and taxation.” Yes, a bill with a name too long to even read all of it.
Here’s the quick summary: You might not have realized it, but 30% of your Nebraska schools property taxes were refundable. Taxpayers needed to request the refund on their tax returns. You were over paying your property taxes and needed to ask Nebraska for the money back on your tax return.
55% of you are pretty angry about this. Or should be. That’s because only 45% of taxpayers claimed the credit. For that reason, also to save paper and win political goodwill with Nebraska voters/tax payers, Jim Pillen proposed the change. Now, instead of over-paying your property taxes, then requesting a refund, the state is just billing you the appropriate amount up front.
But it's not all good news
If you’re doing the math, you might have realized that if this is a $750 million dollar tax Nebraska property tax relief bill, as touted by the politicians, the money had to be coming from somewhere. In fact, according to this Nebraska Examiner article, in 2023, $565 million would be due to Nebraska taxpayers in rebates. If only 45% of taxpayers actually claimed the credits, that would leave over $300 million in lower tax revenue for 2025. Where would that money come from?
No rebates for most of us in 2023
To make up this shortfall – at least in the short term – taxpayers got a massive tax INCREASE. In August, 2024, when LB 34 was passed, our elected officials included a provision that eliminated the refund of 2023 taxes (taxes that were due in 2024) if the taxpayer didn’t pay their taxes in 2023.
For most of Nebraska’s tax payers – the ones that live in Douglas, Sarpy and Lancaster counties, tax statements for the year don’t arrive until December of that month. First half taxes are due March 31 of the next year, and 2nd half taxes are due July 31 of the next year.
What that means is that you just received your bill for 2024 taxes in December of 2024. Those 2024 tax payments are due in March and July of 2025.
For 15% of taxpayers in 2023, they paid their 2023 tax bill right when they received the statement in 2023. For the rest of the 85%, they paid their taxes closer to when they were due in 2024. That 85% of taxpayers can’t claim their 2023 refund on their tax returns this year. Voila! Nebraska found it’s tax shortage! Read a better explanation of what happened here. In short, the Nebraska property tax relief isn’t so relieving for everyone.
Were you a winner or a loser?
Did you win or lose with LB 34? That depends on how good of a tax service you were using and how punctual your payments were on your 2023 property taxes.
If you had a great tax accountant, but paid your taxes when they were due – thanks! You folks paid for this bill. You were taking the refunds, so your net payment was going to be zero. However, since you didn’t pay 2023 taxes in 2023, you’re now footing the entire bill for this change. You won’t get a refund on this year’s tax return.
If you weren’t taking the refunds (55% of you), well, now you’re getting it up front! You won’t be getting a refund on this year’s tax return, but you weren’t going to ask for it anyway.
If you were taking the refunds AND paid your 2023 taxes in 2023, congrats! You’re the big winner.
