greater omaha incentives & Training

Nebraska Advantage Program (LB 312)

The Nebraska Advantage program 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. The program is designed to reward companies via a performance-based system both short and long term. Highlights of the program include:

• Tax credits and sales tax refunds based on a flexible, six-tier investment and job creation schedule  
• Tax credits to reduce or eliminate payroll withholding, sales, property and income tax liabilities
• Companies have five to seven years to attain required job- and investment-creation levels and can utilize credits against the various tax liabilities for up to 15 years 

• Manufacturing
• Call centers, data centers and telecommunications
• Headquarters/administrative operations
• Data processing and Web portals
• Insurance and financial services
• Distribution and warehousing
• Research and development
• Satellite ground services
• Exportable services including:  software development, computer systems design, product testing, guidance or surveillance systems and technology licensing

• The tax credit level for Tiers One, Two and Four is between three and six percent depending on the average wage paid compared to the Nebraska average weekly wage:
• Three percent if the average wage paid is at least 60 percent ($10.45 or $21,742 annual)
• Four percent if the average wage paid is at least 75 percent ($13.07 or $27,177 annual)
• Five percent if the average wage paid is at least 100 percent ($17.42 or $36,236 annual)
• Six percent if the average wage paid is at least 125 percent ($21.78 or $45,295 annual)
• No compensation tax credit is available under Tier Five.
• The tax credit level for Tier Six is 10 percent if either 50 or 75 of the new jobs (depending on investment level) pay an annual threshold wage greater than $54,162 in Cass County; $83,262 in Douglas County; $68,670 in Sarpy County; or $80,944 in Washington County.  A 10 percent compensation credit will exceed withholding tax liability for the 10 year period.  The excess compensation credits may be used to refund real property taxes, sales and use tax liability and state corporate income taxes.

Investment tax credits can be used to reduce the company’s state corporate income tax or sales and use tax liability on company purchases to the extent that such liability is attributable to the project. The credit is based on the company’s investment in qualified property, which includes building, equipment and components, during the entitlement period. For leased space, investment is equal to the annual lease rate multiplied by the term of the lease up to 10 years.

• Tier One is a three percent credit
• Tier Two is a 10 percent credit
• Tier Four is a 10 percent credit
• Tier Six is a 15 percent credit
• No investment tax credit is available for Tier Three or Tier Five

Refund of sales and use taxes is provided on a project’s capital purchases from the date of application through the meeting of the required levels of investment. The refund of sales and use taxes continues for qualified property after the taxpayer reaches the required levels through the entitlement period. By statute, new construction sales-tax credit is estimated by taking 50 percent of the construction price of a new building and improvements multiplied by the sales tax rate.

Refund of sales and use taxes on non-capital purchases (i.e. consumables and utilities) may be credited back to the company by using investment and compensation tax credits.

The entitlement period is the number of years a business may generate and use benefits and includes the year the investment, wages and jobs are met, plus the allowed entitlement period. The carry-over period is the length of time a company may continue to utilize benefits earned but not used during the entitlement period.

• Tiers One and Three entitlement period is six to seven years, depending on the year of attainment.
• Tiers Two, Four and Five entitlement period is the year of attainment plus the next six years.  Credits may be carried over until fully utilized up to 14 years after the year of application for projects qualifying under Tiers Two, Four and Five.
• Tier Six entitlement period is ten years with a one year carry-over period.

Research and Development Advantage
Any business in Nebraska that makes expenditures on research and development as defined in Section 174 of the Internal Revenue Code of 1986 is allowed a research tax credit under terms of the Nebraska Advantage Research and Development Act. The credit amount is 15 percent of the federal credit allowed under Section 41 of the Internal Revenue Code or as apportioned to the state as described below. The credit shall be allowed for the first tax year it is claimed and for the four tax years immediately following.

For organizations conducting business both within and outside the state, the amount of the federal credit may be determined either by dividing the amount expended on research and development in Nebraska in any tax year by the total amount expended on research and development or by allocating the amount of credit on the federal income tax return to the state based on the average of the property factor and the payroll factor.

• Livestock Production
• Research and Development
• Scientific Testing
• Data Processing
• Telecommunications
• Insurance
• Financial Services
• Manufacturing
• Transportation/Warehousing
• Headquarters (administrative)

Customized Job Training Program
The Customized Job Training Program, administered by the Nebraska Department of Economic Development, offers comprehensive on-the-job training grants for new and expanding Nebraska businesses. Customized Job Training funds are used for on-the-job training for newly created production positions (managers, supervisors, accounting, clerical/office and janitorial positions are not eligible). Funds may reimburse the business up to 50 percent of the employee’s wages during the training time up to the allotted dollar amount (see table below). The business must retain all positions created for two years after the training has been completed. Nebraska’s training resources also include Workforce Investment Act funds, local community college training facilities, the local Workforce Development office and local city resources.

The following table identifies the assistance levels available for Customized Job Training grants. 

Community Improvement Financing (CIF/TIF)
Community Improvement Financing (CIF) is Nebraska's version of Tax Increment Financing (TIF). This is a method of financing public improvements associated with a private development project in a designated redevelopment area by using the projected increase in the property tax revenue that will result from the private development.

This tax revenue increase is used to pay for the public improvements or is pledged to repay bonds issued by the local government or loans used to finance these improvements. Revenue bonds can be issued to finance all or part of a site's public pre-construction improvements. Public improvements include land purchase, clearance and sale, construction of streets, sidewalks, utilities, parks or other similar public spaces necessary in site preparation. CIF, in effect, can reduce developer capitalization to a level that makes investment feasible.

Community Development Block Grants (CDBG)
The State of Nebraska Department of Economic Development administers the Community Development Block Grant (CDBG) program, which is designed to create jobs and promote new investment. The interest rate on these loans is currently at zero percent. The maximum CDBG loan is 50 percent of the total project cost, up to $400,000 maximum ($250,000 for job-training grants).

CDBG funds must be used to create positions available to low- to moderate-income residents, aid in the prevention or elimination of slums or blight, or meet other community development emergency needs. CDBG funds can be used to purchase machinery, equipment and inventory, or to meet working capital needs and construct or renovate existing buildings and real estate.

Manufacturing Equipment Sales Tax Exemption Advantage
This provision exempts manufacturing machinery, equipment and related services from sales tax. This is broadly defined to include:

• Equipment for transporting raw materials or components
• Molds and dies for forming cast or injected products or its packaging materials
• Machinery to maintain the integrity of the product or environmental conditions
• Testing equipment for quality control
• Computers that control a manufacturing process
• Machinery used to produce steam, electricity, catalysts, solvents and solutions
• Repair or replacement parts, and all installation
• Repair and maintenance performed on such equipment

Local Option Municipal Economic Development Act
The Local Option Municipal Economic Development Act (LB 840, 1991) 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. Activities eligible for local funds collected for the economic development program would include any project or program for the purpose of providing direct or indirect financial assistance to a qualifying business, or for the payment of related costs and expenses. The program is available for Blair, Nebraska sites.

An economic development program may include, but is not limited to, the following activities:

• Direct loans or grants to qualifying businesses for fixed assets and/or working capital
• Loan guarantees for qualifying businesses
• Grants for public works improvements which are essential for the location or expansion of a qualifying business
• Grants or loans for job training
• The purchase of real estate, options for such purchases, and the renewal or extension of such options
• Payments for salaries and support of city staff or the contracting of an outside entity to implement the economic development program
• Bonding used to carry out program activities

An economic development program may also include grants or loans for the construction or rehabilitation for sale or lease of housing for residents of low to moderate income.

Small Business Innovation Research Program (SBIR)
The objectives of this federal program are to stimulate technological innovation, help small businesses meet federal government research and development (R&D) needs, encourage participation of minority and disadvantaged persons and increase private-sector commercialization of federal research and development projects. Grants are provided through eleven federal agencies having research and development budgets of over $100 million and are awarded to projects meeting the research needs of these agencies. Funding agencies include the Departments of Agriculture, Commerce, Defense, Education, Energy, Transportation, Health and Human Services and the Environmental Protection Agency.

SBIR funding is provided in two phases. In Phase One, companies may use funds to evaluate and demonstrate the technical feasibility of a project. Phase One research efforts are typically six months in duration and awards do not normally exceed $100,000. In Phase Two, funding is used to continue development of the technology and includes any principal R&D efforts. Phase Two grants are typically 24 months in duration and do not exceed $750,000.

• No more than 500 employees
• A for-profit organization
• Located in the United States
• At least 50 percent owned and controlled by U. S. citizens or lawfully admitted permanent residents

Greater Omaha Foreign Trade Zone (No. 19)
Greater Omaha was one of the first municipalities in the country to offer area businesses the competitive advantages of a Foreign Trade Zone (FTZ). By utilizing the FTZ, companies are able to defer duty payments on foreign goods imported here until the time they formally enter U.S. trading channels.

Greater Omaha’s FTZ is located on more than 17 acres with 250,000 square feet of warehouse space. There is no time limit on storing, processing, assembling, exhibiting or inspecting the imported goods and 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 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.

Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit (WOTC), administered by the Nebraska Department of Labor, provides a credit against federal income tax liability of up to $2,400 for each qualified person hired. For those working 400 hours or more, the credit is 40 percent of the first $6,000 in wages. For those working less than 400 hours but at least 120 hours, the credit is 25 percent of the first $6,000 in wages.

Categories of workers eligible for WOTC include members of families that have received Aid to Families with Dependent Children or Temporary Assistance for Needy Families, low-income veterans, 18 to 24 year old food-stamp recipients, 16 and 17 year old residents hired for summer employment, disabled persons who have completed, or are completing, rehabilitative services, low income ex-felons and persons who have received Supplementary Security Income.

Other Incentives

Other aspects of state tax law, which serve as positive investment factors for businesses include:

• No throwback rule. A throwback rule says that if a corporation with facilities in the state has income that is not taxed by any state (because it does not have sufficient physical presence in some states where it has sales), then that income is "thrown back" and taxed in the state where the company has facilities.
• No tax on intangibles.
• No property tax on business inventories including raw materials, goods in process and finished goods.
• Sales tax refund for pollution control equipment.
• Personal property tax depreciation schedules permitting 100 percent depreciation for property tax assessment purposes.
• No sales or use tax on ingredients used in manufacturing or processing of a product destined for ultimate retail use.
• Sales tax exemption on sales of common-carrier vehicles and replacement parts to recognized common carriers.
• No sales tax on water used to irrigate agricultural land or in manufacturing.
• Sales tax exemption on electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, coke, nuclear fuel, and butane when more than 50 percent of the amount purchased is used directly in processing, manufacturing or refining of tangible property, or in the generation of electricity.

Additional Training Resources
From initial employee recruitment to pre-employment testing and existing employee retraining, programs have been developed to meet the training needs of Nebraska's businesses. Customized training programs can be developed at little or no cost to a new or expanding firm.

Nebraska Worker Training Program (LB 1337)
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 Nebraska Worker Training Program is to enhance the skill level and productivity of employees. Use of program funds is extremely flexible with the type and length of training program and training vendors and materials at the discretion of the company. Examples of eligible projects include:

• Training required by installation of new equipment and technology in the workplace
• Worker skill assessment
• Apprenticeship programs
• English as a second language training
• ISO-9000 training
• Assisting staff to access new markets
• Safety training
• Labor-management cooperation activities
• Benchmarking

A match of at least one dollar of employer's 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.

Nebraska Dept. of Labor’s Workforce Development
The Nebraska Department of Labor’s Workforce Development division provides a wide range of employment services to small and large businesses, including: statewide labor pool, job placement, workforce recruitment and labor market information. In addition, the division offers business owners the opportunity to work on local employer committees to improve employment services to the community.

Area Institutions
In addition to state-sponsored programs, businesses are able to draw on the experience and resources of two primary institutions within Greater Omaha: Metropolitan Community College and Iowa Western Community College. Both offer a variety of existing training programs and classes. Customized training and development programs may also be initiated.

Workforce Investment Act
The Workforce Investment Act (WIA) provides employment and training services to help displaced workers, or workers who have been laid off, to develop marketable job skills. Services include classroom, on-the- job and customized training, assessment, counseling and supportive services. In addition, WIA of Greater Omaha works with area businesses to develop training opportunities to help individuals enter the labor market. Employers who use WIA participants are eligible to use WIA training dollars.

Business Assistance and Financing
Nebraska has assistance programs to help businesses stay competitive and/or find financing. Ranging from incubator space to TIF to help in manufacturing technologies, aid to business is an important part of Nebraska's business-development incentive package.

• The Nebraska Economic Development Corporation (NEDCO) 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 (CDC) by the U.S. Small Business Administration (SBA) to offer the SBA 504 Loan Program.
• Nebraska Business Development Center assists in planning, analysis, market research, feasibility studies and microcomputer training.
• Great Plains Minority Supplier Development Council, Inc. offers assistance to minority-owned businesses.
• Nebraska Technical Assistance Center offers technical help in process design, productivity, automation, safety and patent investigations.
• The Food Processing Center provides expertise for the food processing industry in manufacturing,
  technology, marketing and business development.
• North Omaha Business Development Corporation has loans or equity financing available for businesses creating jobs in North Omaha.
• Omaha Business and Technology Center offers a business-incubator facility to aid growth of small
  businesses in Omaha.