Nebraska LB 531: Adopt the Nebraska Child Care Contribution Tax Credit Act

Bill Text

LEGISLATURE OF NEBRASKA
ONE HUNDRED SEVENTH LEGISLATURE
FIRST SESSION
LEGISLATIVE BILL 531
 
Introduced by Briese, 41.
Read first time January 19, 2021
Committee: Revenue
A  BILL  FOR  AN  ACT  relating  to  revenue  and  taxation;  to  amend  sections1
77-2715.07,  77-2717,  and  77-2734.03,  Revised  Statutes  Cumulative2
Supplement, 2020; to adopt the Nebraska Child Care Contribution Tax3
Credit  Act;  to  harmonize  provisions;  and  to  repeal  the  original4
sections.5
Be it enacted by the people of the State of Nebraska,6
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Section 1.  Sections 1 to 8 of this act shall be known and may be1
cited as the Nebraska Child Care Contribution Tax Credit Act.2
Sec.  2.   The  Legislature  finds  that  COVID-19  has  greatly  impacted3
the child care industry, and access to quality child care opportunities4
is crucial to Nebraska's ongoing economic stability and growth.5
Sec.  3.   For  purposes  of  the  Nebraska  Child  Care  Contribution  Tax6
Credit Act:7
(1) Child means an individual who is twelve years of age or less;8
(2)  Child  care  and  education  provider  means  a  person  who  owns  or9
operates an eligible child care and early childhood education program;10
(3) Department means the Department of Revenue;11
(4) Eligible child care and early childhood education program means12
a program that:13
(a) Is enrolled to participate in the quality rating and improvement14
system developed under the Step Up to Quality Child Care Act;15
(b)  Is  licensed  as  a  family  child  care  home  I,  family  child  care16
home II, child care center, preschool, or school-age-only center; and17
(c) Operates as a for-profit child care business or is a nonprofit18
organization under the Internal Revenue Code of 1986;19
(5) Intermediary means any organization that distributes funds for20
the  purpose  of  supporting  an  eligible  child  care  and  early  childhood21
education program;22
(6)  Qualifying  contribution  means  a  contribution  in  the  form  of23
cash,  check,  cash  equivalent,  agricultural  commodity,  livestock,  or24
publicly  traded  security  that  is  used  for  one  or  more  of  the  purposes25
described in subsection (4) of section 4 of this act. A contribution of26
services or property is not a qualifying contribution; and27
(7) Taxpayer means any person subject to the income tax imposed by28
the  Nebraska  Revenue  Act  of  1986.  The  term  includes  resident  and29
nonresident individuals, estates, trusts, and corporations.30
Sec. 4.  (1) For taxable years beginning or deemed to begin on or31
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after  January  1,  2022,  and  before  January  1,  2027,  under  the  Internal1
Revenue  Code  of  1986,  as  amended,  any  taxpayer  who  makes  a  qualifying2
contribution may apply to the department to receive a nonrefundable tax3
credit  against  the  income  tax  imposed  by  the  Nebraska  Revenue  Act  of4
1967.5
(2)(a) The credit shall be equal to either fifty percent or seventy-6
five  percent  of  the  taxpayer's  qualifying  contribution  made  during  the7
taxable year, except that the credit for a taxpayer shall not exceed one8
hundred thousand dollars for any single taxable year.9
(b)  The  credit  shall  be  equal  to  seventy-five  percent  of  the10
qualifying contribution if:11
(i)  The  eligible  child  care  and  early  childhood  education  program12
that receives the contribution has a physical presence in an opportunity13
zone in this state designated pursuant to the federal Tax Cuts and Jobs14
Act, Public Law 115-97; or15
(ii) The eligible child care and early childhood education program16
that  receives  the  contribution  has  at  least  one  child  enrolled  in  the17
child  care  subsidy  program  established  pursuant  to  section  68-1202  and18
the child care and education provider is actively caring and billing for19
the child as verified by the Department of Health and Human Services.20
(c)  The  credit  shall  be  equal  to  fifty  percent  of  the  qualifying21
contribution if subdivision (2)(b) of this section does not apply.22
(3) If a taxpayer's credit exceeds the total tax due, the taxpayer23
may carry forward the excess credit for up to five taxable years after24
the taxable year in which the credit was first allowed, but the taxpayer25
must use the carryover credit in the earliest taxable year possible.26
(4)  A  qualifying  contribution  shall  be  used  for  the  purposes  of27
promoting or enhancing quality child care and early childhood education28
programs. Such purposes include, but are not limited to, contributions:29
(a) For the establishment or operation of an eligible child care and30
early childhood education program;31
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(b) For the establishment of a registered grant or loan program for1
parents  requiring  financial  assistance  for  an  eligible  child  care  and2
early childhood education program;3
(c) To an early childhood collaborative or another intermediary for4
t