Revenue Ruling 29-08-1
Economic Development Tax Incentives

WAGE AND INVESTMENT LEVELS FOR NEBRASKA ECONOMIC DEVELOPMENT
TAX INCENTIVES FOR 2008 AND 2009 APPLICATIONS

Issue:

What are the required wage and investment levels for Nebraska economic development incentive applications filed on or after January 1, 2009?

Conclusion:

On or after January 1, 2009, an applicant must meet the following wage and investment requirements to qualify for benefits under the Nebraska Advantage Act:

• Tier 1 and Tier 2 applicants must meet an investment requirement of $1 million and $3 million, respectively, (equal to 2008 levels), and a wage requirement of $21,136 (an increase of $855 above the 2008 level).
   
• Tier 4 applicants must meet an increased investment requirement of $12 million (an increase of $2 million above the 2008 level), and a wage requirement of $21,136 (an increase of $855 above the 2008 level).
   
• Tier 5 applicants must meet an increased investment requirement of $36 million (an increase of $5 million above the 2008 level), and a wage requirement of $21,136 (an increase of $855 above the 2008 level).
   
• Tier 6 applicants must meet an increased investment requirement of $12 or $122 million (an increase of $2 or $22 million, respectively, above the 2008 levels), and a wage requirement of at least $52,841 (an increase of $2,139 above the 2008 level; note: wage requirements may vary based upon county).

Analysis:

Under the Nebraska Advantage Act, investment thresholds are indexed on October 1 of each year and apply for all applications filed on or after January 1 of the following year. See Neb. Rev. Stat. § 77-5725(9). The index is the result of the most recent Producer Price Index (PPI) for all commodities, published monthly by the United States Department of Labor, Bureau of Labor Statistics, divided by the PPI for the first quarter of 2006, multiplied by the applicable investment threshold for each respective Tier. See Neb. Rev. Stat. § 77-5725(1). The result is rounded to the next lowest one million dollars. Adjustments do not apply to projects after the year of application.

Under the Nebraska Advantage Act, Tier 1, Tier 2, Tier 4 and Tier 5 applicants may be entitled to a credit of 3 to 6 percent of the average wage paid to new employees if the wage equals at least 60 percent of the Nebraska average annual wage for the year of application. Tier 6 applicants may be entitled to a credit of 10 percent of the average wage paid to all employees if the wage exceeds the greater of 200% of the county average weekly wage or 150% of the state average weekly wage for the year of application. The wage credit is not available for compensation paid to any employee in excess of one million dollars. See Neb. Rev. Stat. § 77-5725(3) and (4).

Wage levels for the Nebraska Advantage Rural Development Act are set by Neb. Rev. Stat. § 77-27,188(1)(b) based on the growth in the rural Nebraska average wage. The wage limit for the Nebraska Advantage Microenterprise Tax Credit Act is established in Neb. Rev. Stat. § 77-5903 at 150% of the Nebraska average weekly wage.

*Tier 6 only, state-wide average. Wage levels for each county available on the Department of Revenue website.

APPROVED:
Douglas A. Ewald
Tax Commissioner

November 26, 2008