One state property tax credit rises slightly in 2023, while another still isn’t being fully claimed

Property owners have yet to claim about $128 million in funds set aside for income tax credits

By: - September 20, 2023 4:41 pm

(Getty Images)

Editor’s note: this story has been updated.

LINCOLN — One state property tax credit will rise slightly in 2023, but all Nebraskans still aren’t claiming a more lucrative tax refund available via their income tax return.

The Nebraska Department of Revenue announced Tuesday that the real property tax credit for tax year 2023 will amount to $220.76 for the owner of a $200,000 home, and $264.90 for the owner of $200,000 worth of farmland.

That credit, which shows up on the yearly property tax statements sent to landowners and homeowners, rose slightly from a year ago, when it was $213 for a $200,000 home and $256 for the owner of a like amount of farm or ranch property.

Income tax credits go unclaimed

But all property owners still aren’t claiming a 3-year-old income tax credit that partially refunds property tax payments for K-12 schools and community colleges.

A year ago, state officials said that 40% of state taxpayers had failed to take the credit on their state income tax returns as of September, leaving $200 million unclaimed.

Those numbers have improved somewhat in 2023, with about $128 million unclaimed as of mid-September, or about 23% of the $548 million available.

A Revenue Department spokeswoman, Lydia Brasch, said Wednesday that more taxpayers are expected to claim the credit in October, when those who asked for an extension in filing their income tax returns will file.

She added that the department plans to send out postcards to property owners in hopes of increasing the use of the refund, which is intended to soften the impact from the state’s traditionally high property taxes.

State Sen. Lou Ann Linehan of Elkhorn. (Zach Wendling/Nebraska Examiner).

State Sen. Lou Ann Linehan of Elkhorn, who led adoption of the income tax credit as chair of the Legislature’s Revenue Committee, said Thursday that new tax credits aren’t usually fully utilized, but she expects that over time, more people will take advantage as it becomes more widely known.

The income tax credit is more sizable than the older, automatic credit that shows up on property tax statements and provides more than $1,000 in credits on a home worth $250,000. But state officials have struggled to make home and farm owners aware of the tax break.

A big year for tax cuts

This was a big year for tax cuts in the Nebraska Legislature, with lawmakers passing increases in both tax credit programs and setting the state on a course to reduce the top state individual and corporate income tax rate to 3.99%. It once stood at 6.84% for individuals, which senators said left the state uncompetitive as other states have lowered tax rates.

Meanwhile, the advent of casino gambling in Nebraska has begun to show up in terms of tax relief, though only slightly.

Lincoln casino
Construction of a $200 million casino is underway at the Lincoln Race Course by WarHorse, a subsidiary of the Winnebago Tribe of Nebraska. (Artist’s rendering courtesy of WarHorse)

State Property Tax Administrator Ruth Sorensen said the real property tax credit for 2023 is about 50 cents higher this year for the owner of a $200,000 home due to the extra  $1.4 million provided from the opening of a casino in the state.

The first casino in the state, WarHorse, in Lincoln, opened a year ago and contributed that amount to the credit fund during 2022, Sorensen said.

Since then, temporary casinos have opened in Grand Island and Columbus.

Through August of this year, the three casinos have contributed $11.3 million in gaming taxes to the state, according to figures kept by the Nebraska Racing and Gaming Commission. At that rate, about $17 million will be paid in gaming taxes this year.

More casinos proposed

Columbus casino
A new racetrack and casino — referred to as a ‘racino’ — is rising in Columbus. (Paul Hammel/Nebraska Examiner)

Under state law, 70% of the gaming tax revenue will go to the state real property tax credit fund, or about $12 million, while 25% will be split evenly among the city and county where the casino is located. The remaining 5% will be divided between the state’s general fund and a state problem gamblers program.

Nebraska voters, in 2020, approved allowing casino gambling at the state’s six licensed horse racing tracks. Other communities, including Bellevue, Norfolk and Ogallala, also ave expressed interest in building tracks and casinos, though expansion to new tracks appears a few years away.

Gambling proponents have estimated that casinos, when fully opened, will generate between $45 million and $91 million in additional tax relief.


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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.