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— Zach Wendling Nebraska Examiner
LINCOLN — Tax credits to offset property taxes owed to local K-12 school districts are now automatically applied, but Nebraskans still need to file for income tax credits for community colleges for additional relief each year.
State lawmakers opted to “front-load” the tax credits for property taxes paid to K-12 schools in August, beginning with tax statements that went out in December, lowering property tax obligations. But Nebraskans seeking similar relief on property taxes paid last year to community colleges — before the state largely took over funding them — still need to take the extra step of requesting a refund via their tax returns by April 15.
This includes the last round of general fund community college property taxes, as well as capital improvements or bonds assessed in December 2023 that most taxpayers paid throughout 2024.
Currently, the income tax credits for property taxes paid to community colleges are set to be available each year, but must be filed for one year after payment.
The state replaced the majority of local community colleges’ property tax authority with state dollars, effective this fiscal year, which zeroed out the general fund property tax-funded part of the colleges’ general funds in December but left a narrow levy authority to the six colleges.
This fiscal year, the state picked up more than $253 million, an amount that grows each year for each college.
Community colleges requested $289 million in property taxes in 2023, and the replacement state revenue helped drop that amount to $69.4 million in 2024. College boards retain a 2-cent tax rate per $100 of taxable property valuations for paying off bonds or establishing a capital improvement and bond-sinking fund, which all six colleges requested.
The 2023 agreement also automatically locked in community colleges for annual increases in replacement state dollars. State lawmakers must give community colleges an increase in that bucket of funds by 3.5% or in “reimbursable educational units” for each community college. If not, community college boards could raise property taxes to make up the difference.
The preliminary state budget proposals from both Gov. Jim Pillen and the Appropriations Committee fulfill those funding obligations.
Nebraska taxpayers can use this online tool through the Nebraska Department of Revenue to determine the eligible community college refund they are entitled to before filing tax returns this year. Credits are rounded to the nearest whole dollar.
More information on the property tax credit program is available here. The 2024 property tax credit form is available here.
