INCENTIVES
An Extra Advantage
The Nebraska Advantage program is a performance-based business tax incentive package that can substantially reduce, and in certain cases eliminate, a company’s income, sales, payroll withholding and certain classes of personal property taxes for up to 15 years. Nebraska Advantage has six tiers of benefits based on qualified investment, wage rates and jobs created. The Rural/Redevelopment Advantage consists of two tiers, with the benefits received based on the number of new jobs created and the size of the investment. The table at the end of this brochure summarizes the investment and employment thresholds and contains a list of qualifying businesses for each tier. It also provides a brief description of the benefits available under the program by tier.
In addition, the Nebraska Advantage program includes Customized Job Training Advantage, Research and Development Advantage credits and Microenterprise Tax Credit Advantage.
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Nebraska Worker Training Program (LB 1337)
Workforce Training Assistance Nebraska Advantage – Customized Job Training Grants from $500 to $4,000 per qualified new job are provided through this flexible program. Companies may use these funds for internal, company specific, outside vendor or community college training. 2013 Starting Hourly Wage Rates Rates are to be used as an estimate of training assistance for newly created jobs.
Percent of Average Starting Wage
Average Starting Wage; Omaha MSA
Range of Assistance
100%
$9.70
$500
125%
$12.13
$1,000
150%
$14.55
$2,000
175%
$16.98
$3,000
200%
$19.40
$4,000
Source: Nebraska Department of Labor, Labor Market Information website, Third Quarter, 2012 MSA (Metropolitan Statistical Area)
The Nebraska Worker Training Program (LB 1337), administered by the Nebraska Department of Labor, provides grants to assist firms in the retraining and upgrading of existing employees. The goal of the program is to enhance the skill level and productivity of employees and increase companies’ profitability. Use of program funds is extremely flexible; the type and length of training program and training vendors and materials is at the discretion of the company. Worker training grants can also support training provided in-house by company staff. A match of at least one dollar of employers’ funds for each dollar of state funds is required. Wages paid to employees while in training; equipment, space or other facilities used in training and supervisory personnel and materials provided by the company may be used as company match.
Heartland Workforce Solutions Heartland Workforce Solutions (HWS) administers Workforce Investment Act services in Greater Omaha to respond to the needs of employers for current and future workforce demands. HWS prepares workers to succeed in the workplace through aptitude/interest assessments, basic education classes, soft skills training and specialized certified training for in demand career placement. Healthcare, transportation/ logistics, manufacturing and call centers are a few of the industries that might benefit from HWS services.
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Additional Programs and Benefits Research and Development Advantage
Greater Omaha Foreign Trade Zone (No. 19)
This program offers a refundable tax credit for qualified research and development activities undertaken by a business entity. The credit is equal to 15 percent of the federal credit allowed under Section 41 of the Internal Revenue Code of 1986 for research and development. The credit is increased to 35 percent of the federal credit for expenditures on the campus of a college or university in Nebraska or a facility owned by a college or university in Nebraska.
Greater Omaha was one of the first areas in the country to offer area businesses the competitive advantages of a Foreign Trade Zone (FTZ). Utilizing the FTZ allows companies to defer duty payments on imported foreign goods until they formally enter U.S. trading channels.
Microenterprise Tax Credit Advantage A 20 percent refundable tax credit is available to micro businesses based on increased compensation for employees or increased investment in targeted communities. Applicants may qualify for a maximum $10,000 throughout the life of the program. This credit is limited to companies that have five or fewer employees at the time the application is filed, including start-ups. Credits are approved on a first-in, first-out basis through an application process with the Nebraska Department of Revenue. Credits are earned on increased expenditures for wages, buildings, certain expenses and non-vehicle depreciable personal property. Capital Gains and Extraordinary Dividend Exclusion The state grants exemption from personal income tax on capital gains realized from selling or exchanging stock that has been acquired by an employee of that corporation. The employee can also exclude extraordinary dividends that exceed 20 percent of the value of the stock for the same corporation. The corporation must have done business in Nebraska for at least three years and must have a minimum of five shareholders. Related shareholders cannot own more than 90 percent of the stock.
Greater Omaha’s FTZ is within a 250,000 square foot facility near Eppley Airfield. There is no time limit on storing, processing, assembling, exhibiting or inspecting the imported goods. If the imported goods are later exported, customs duty does not need to be paid. As a designated port of entry, Greater Omaha has a customs director just minutes away from the FTZ, allowing goods to be imported and cleared quickly and easily. Greater Omaha’s central location as a transportation hub also allows companies to move their goods around the country and the world with great efficiency. Companies have the opportunity to apply for their own subzone designation under Omaha’s general purpose Foreign Trade Zone No. 19.
Other Nebraska Tax Savings • Sales tax exemption on: - Manufacturing equipment - Raw materials - Utilities used in manufacturing • No intangibles tax • No inventory tax • Sales tax refund on pollution control equipment • No throwback rule • 100 percent personal property tax depreciation schedules
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Financing Programs Community Development Block Grant (CDBG) These loans are designed to create quality jobs and promote new investment. CDBG funds must be used to benefit low- to moderateincome people, aid in the prevention or elimination of slums or blight, or meet other community development emergency needs. These funds can be used to purchase machinery, equipment and inventory; meet working capital needs; develop community infrastructure; or construct or renovate existing buildings and real estate. Community Improvement Financing – Commonly known as Tax Increment Financing (TIF)
Additional Business Assistance and Financing Programs Nebraska has assistance programs to help businesses stay competitive and/or find financing. Assistance ranges from helping find incubator space to helping identify manufacturing technology assistance. Aiding businesses is an important part of Nebraska’s businessdevelopment incentive package. • The Nebraska Economic Development Corporation is an IRS-designated 501(c)(3) nonprofit corporation promoting economic development and job creation throughout Nebraska. NEDCO is
licensed as a Certified Development Company by the U.S. Small Business Administration to offer the SBA 504 Loan Program. • The Nebraska Business Development Center assists in planning, analysis, market research, feasibility studies and computer training. • The Food Processing Center provides expertise for the food processing industry in manufacturing, technology, marketing and business development. • The Omaha Business and Technology Center offers a business-incubator facility to aid growth of small businesses in Omaha.
Nebraska’s TIF program provides benefits in designated redevelopment areas as a way to subsidize public improvements associated with private development. The TIF program uses the projected increase in real property tax revenue resulting from a private development to pay for public improvements or to repay local government bonds or loans used to finance those improvements. Property acquisition, site preparation, utility extensions and rehabilitation of structures are also qualified activities. Local Option Municipal Economic Development Act The Local Option Municipal Economic Development Act (LB 840) authorizes incorporated cities and villages to collect and appropriate local tax dollars (sales and/or property tax) if approved by the local voters, for economic development purposes. The Act requires the formulation of a local economic development program plan. The plan forms the basis for the collection and expenditure of local tax revenues for economic development. The Nebraska Enterprise Fund A statewide financial intermediary dedicated to supporting microenterprise companies. In 1997, the Nebraska Microenterprise Partnership Fund became incorporated as a 501(c)(3) and became a certified Community Development Financial Institution in 1998.
Economic Development Initiatives Nebraska has adopted several legislative initiatives and programs designed to build Nebraska’s innovation economy and foster new high quality job opportunities. Talent & Innovation Initiative (TI2) The four-part TI2 was developed to enhance momentum in Nebraska’s fastest growing industries, maintain Nebraska’s world class workforce and leverage private sector innovation. 1 Intern Nebraska Program connects college students and employers from across the state, providing an opportunity for them to co-invest in the future. The InternNE program offers financial assistance to companies in targeted industries that create new internship opportunities for Nebraska’s college students. The program provides eligible businesses a 40 percent match up to $3,500 per internship, or, for businesses in distressed areas, a 60 percent match up to $5,000 per internship for hiring students who completed half the required credit hours at a four-year or two-year degree institution. Internships must pay at least minimum wage and range from 200 hours in 12 weeks to no more than 1,000 hours in 50 weeks. Any business may post opportunities for paid, quality internships and any student may search the opportunities on InternNE.com. Continued
2 Business Innovation Act helps businesses develop new technologies and leverage innovation to enhance quality job opportunities in the state. It provides competitive matching grants for research, development and innovation, and will help expand small business and entrepreneurial outreach efforts. Eligible grant activities include: prototype development, product commercialization and applied research in the state and support for small business and microenterprise lending. 3 Site and Building Development Fund (SBDF) is designed to increase industrial sites and buildings available for business attraction and expansion. Local governments and Nebraska nonprofit organizations are eligible to apply. SBDF funding is focused on land and infrastructure development and building rehabilitation. The program requires a 1:1 matching ratio. First priority projects that are willing to commit to locating on a site within 90 days and do no not already have a significant presence within the state may qualify for funding under this program. 4 Angel Investment Tax Credit encourages investment in high-tech start-up enterprises in Nebraska by providing 35to 40 percent refundable state income tax credits to qualified Nebraskans investing in qualified early-stage companies. Capped at $3 million annually, the program requires a minimum investment of $25,000 for individuals and $50,000 for investment funds. Eligible small businesses must have fewer than 25 employees, with the majority based in the state. Nebraska Progress Loan Fund (NPLF) The Nebraska Progress Loan Fund will make loans to qualifying small businesses. Qualifying small businesses employ fewer than 750 full-timeequivalent employees. Generally, the applicants represent existing and startup businesses experiencing financing challenges. The minimum loan to any one business will be $50,000 with a maximum of $2 million. NPLF funding must be matched at least 1:1 with private sources of capital. NPLF funds are also available for up to three years as interim financing of larger projects. The interim loan maximum amount is $5 million. Generally, the initial interest rate is zero percent but after the initial three-year period, may be renegotiated to an interest rate ranging from zero to 4 percent. Nebraska Economic Gardening Program The purpose of the Nebraska Economic Gardening Program, authorized by the Small Business Innovation Act, is to provide technical assistance, which may include information tools, state and national demographic trends, competitive intelligence, marketing lists, strategy, analysis, capital referrals and labor analysis, etc., for up to 40
Nebraska-based growth businesses — one half of which are located in counties with populations of fewer than 50,000 people. Nebraska Angel Sidecar Fund The Nebraska Angel Sidecar Fund provides early investment capital that matches private angel investment in start-up businesses that are developing, modifying or employing new technology. The Invest Nebraska Corporation utilizes the Angel Sidecar Fund to accelerate private investment in Nebraska-based start-up companies and increase overall investment impact. The seed capital may be used by the startup company for advanced intellectual property development and evaluation; advanced proof of concept work for scientific discovery; advanced prototype design and development; hiring key personnel and related activities.
Eligible Nebraska-based start-up companies have • committed leadership team with significant experience commercializing technology and launching a start-up technology business, or committed collaborators and/or mentors with such experience • viable plan for securing the venture capital financing needed to successfully grow the start-up company within a reasonable time period after the seed capital co-investment • market-based, third-party investment commitment equal to at least 100 percent of the total requested seed capital funding from the Angel Sidecar Fund Sidecar investments are available in amounts ranging from $50,000 to $500,000. The angel funding group must match the Angel Sidecar Fund investment at a ratio of at least 1:1. Sidecar investments made by the Invest Nebraska Corporation and participating angel group will result in either convertible debt or equity being invested into the qualifying small business. There are other restrictions related to the use of Angel Sidecar Fund funding.
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Nebraska incentive programs are all performance based. Qualifying businesses may receive benefits according to the six- tiered program on the following chart.
Nebraska Advantage Incentives Receive Greater Returns on Your Investment in Nebraska
Nebraska Advantage
Nebraska Advantage
Nebraska Advantage
TIER ONE
TIER TWO
TIER THREE
Investment
$1,000,000
$3,000,000
0
Job Creation
10
30
30
Qualified Businesses
Research and Development Scientific Testing Manufacturing Targeted Exportable Services (75% of sales outside Nebraska or to the U.S. Government including cloud computing) *Software Development Services *Computer Systems Design *Product Testing Services *Guidance or Surveillance Systems *Technology Licensing
Research and Development Scientific Testing Data Processing Telecommunications, Insurance Financial Services Manufacturing Satellite Ground Services Data Centers, Call Centers Telemarketing Transportation/Warehousing Headquarters (administrative) Targeted Exportable Services (75% of sales outside Nebraska or to the U.S. government, including cloud computing) *Software Development Services *Computer Systems Design *Product Testing Services *Guidance or Surveillance Systems *Technology Licensing Internet Web Portals Retail Sales of TPP if 20% is at wholesale, manufactured or to someone else in a qualified business Retail sales of TPP if 75% or more of sales are outside Nebraska
Research and Development Scientific Testing Data Processing Telecommunications, Insurance Financial Services Manufacturing Satellite Ground Services Data Centers, Call Centers Telemarketing Transportation/Warehousing Headquarters (administrative) Targeted Exportable Services (75% of sales outside Nebraska or to the U.S. government including cloud computing) *Software Development Services *Computer Systems Design *Product Testing Services *Guidance or Surveillance Systems *Technology Licensing Internet Web Portals Retail Sales of TPP if 20% is at wholesale, manufactured or to someone else in a qualified business Retail sales of TPP if 75% or more of sales are outside Nebraska
Investment Credits
3%
10%
Not Applicable
Compensation Credits (compensation means wages and other payments subject to federal Medicare tax)
Sliding scale job credit on payroll of new employees, including tele-workers. 3% if 60% of Neb. avg. wage 4% if 75% of Neb. avg. wage 5% if 100% of Neb. avg. wage 6% if 125% of Neb. avg. wage
Sliding scale job credit on payroll of new employees, including tele-workers. 3% if 60% of Neb. avg. wage 4% if 75% of Neb. avg. wage 5% if 100% of Neb. avg. wage 6% if 125% of Neb. avg. wage
Sliding scale job credit on payroll of new employees, including tele-workers. 3% if 60% of Neb. avg. wage 4% if 75% of Neb. avg. wage 5% if 100% of Neb. avg. wage 6% if 125% of Neb. avg. wage
Sales Tax Refund
1/2 of sales tax on project’s capital purchases
All sales tax on project’s capital purchases
Not Applicable
Personal Property Tax Exemptions
Not Applicable
Up to 10 years on computer systems and peripherals for Internet Web portals or data centers.
Not Applicable
Use of Credits
Sales tax, income tax, employee withholding (wage credit only)
Sales tax, income tax, employee withholding (wage credit only)
Sales tax, income tax, employee withholding (wage credit only)
Attainment Period
Up to 5 years
Up to 7 years
Up to 5 years
Entitlement Period
6 to 7 years
7 years
6 to 7 years
Credit Carry Over Period
0 to 3 years
2 to 8 years
0 to 3 years
Application Fee
$1,000
$2,500
$2,500
Nebraska Average Wage: $38,269 (For agreements signed in 2013) Each applicant must use E-Verify to check the work eligibility of the newly hired Nebraska employees.
Renewable Energy Projects (LB 104 – Operative Date: June 6, 2013)
A business that produces electricity for sale by using renewable energy resources may qualify for Nebraska Advantage incentive benefits. A project may qualify under Tier 5 with a minimum investment in qualified property of $20 million and the maintenance of employment at the renewable energy project. A renewable energy project may also be included in a project for any other tier, except for Tier 1, by meeting applicable investment and employment thresholds. Sources of renewable energy include, but are not limited to: wind, solar, geothermal, hydroelectric, biomass, and transmutation of elements.
Tier 2 Data Center: Augmented Tier 2 Benefits for Data Centers Data Center projects with at least $200 million of investment and 30 new employees will receive the following benefits in addition to the regular Tier 2 benefits: 10-year personal property tax exemption for ALL personal property at the project Use of credits to receive a cash payment from the state equal to ALL real property taxes paid at the project
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Nebraska Advantage
Nebraska Advantage
Nebraska Advantage
TIER FOUR
TIER FIVE
TIER SIX
NE ADV Rural/ Redevelopment
NE ADV Rural/ Redevelopment
LEVEL ONE
LEVEL TWO
$12,000,000
$37,000,000
$10,000,000 or $109,000,000
$125,000
$250,000
100
(Maintain Employment)
75 or 50
2
5
Research and Development Scientific Testing Data Processing Telecommunications, Insurance Financial Services Manufacturing Satellite Ground Services Data Centers, Call Centers Telemarketing Transportation/Warehousing Headquarters (administrative) Targeted Exportable Services (75% of sales outside Nebraska or to the U.S. government including cloud computing) *Software Development Services *Computer Systems Design *Product Testing Services *Guidance or Surveillance Systems *Technology Licensing Internet Web Portals Retail Sales of TPP if 20% is at wholesale, manufactured or to someone else in a qualified business Retail sales of TPP if 75% or more of sales are outside Nebraska
Research and Development Scientific Testing Data Processing Telecommunications, Insurance Financial Services Manufacturing Satellite Ground Services Data Centers, Call Centers Telemarketing Transportation/Warehousing Headquarters (administrative) Targeted Exportable Services (75% of sales outside Nebraska or to the U.S. government including cloud computing) *Software Development Services *Computer Systems Design *Product Testing Services *Guidance or Surveillance Systems *Technology Licensing Internet Web Portals Retail Sales of TPP if 20% is at wholesale, manufactured or to someone else in a qualified business Retail sales of TPP if 75% or more of sales are outside Nebraska
Any business activity other than retail
Must be located in a county with population less than 15,000, any village (pop. 100 800) or in a selected redevelopment area.
Must be located in a county with population less than 25,000 or any city of the second class (pop. 801 5,000).
Livestock Production Research and Development Scientific Testing Data Processing Telecommunications Insurance Financial Services Manufacturing Transportation/ Warehousing Headquarters (administrative)
Livestock Production Research and Development Scientific Testing Data Processing Telecommunications Insurance Financial Services Manufacturing Transportation/Warehousing Headquarters (administrative)
10%
Not Applicable
15%
$2,750 of refundable credits per $50,000 of qualifying investment
$2,750 of refundable credits per $50,000 of qualifying investment
Sliding Scale job credit on payroll of new employees, including tele-workers. 3% if 60% of Neb. avg. wage 4% if 75% of Neb. avg. wage 5% if 100% of Neb. avg. wage 6% if 125% of Neb. avg. wage
Not Applicable
10% job credit on new employee compensation. Wage thresholds per new position are the greater of 150% of the average state wage or 200% of the county average wage
$3,000 of refundable credits per full-time equivalent employee, includes tele-workers
$3,000 of refundable credits per full-time equivalent employee, includes tele-workers
All sales tax on project’s capital purchases
All sales tax on project’s capital purchases
All sales tax on project’s capital purchases
Not Applicable
Not Applicable
Turbine powered aircraft, computer systems, agricultural processing machinery, personal property used in distribution facilities for up to 10 years.
Up to 10 years on computer systems and peripherals for Internet Web portals or data centers.
Personal property tax exemption for all Personal property at the project for up to 10 years
Not Applicable
Not Applicable
Sales tax, income tax, employee withholding (wage credit only)
Not Applicable
Same as Tiers 1 - 4 PLUS: All statewide sales tax and site specific real property taxes
Credits are refundable, may be used to reduce income tax liability or a refund on sales taxes
Credits are refundable, may be used to reduce income tax liability or a refund on sales taxes
Up to 7 years
Up to 7 years
Up to 5 years
The year of application plus 1 year to achieve thresholds; must maintain investment and employment for 3 years
The year of application plus 1 year to achieve thresholds; must maintain investment and employment for 3 years
7 years
7 years
10 years
Not Applicable
Not Applicable
2 to 8 years
Not Applicable
1 year
Not applicable
Not Applicable
$5,000
$2,500
$10,000
$500
$500
Retail sales of tangible personal property (TPP) if 75% or more of sales are outside of Nebraska Retail sales of TPP if 20% is at wholesale, manufactured or to someone else in a qualified business
SelectGreaterOmaha.com 402-346-5000 • 800-852-2622 1301 Harney St., Omaha, NE 68102
Aug. 2013