SALT Report 1474 – The Nebraska State Legislature enacted legislation that amends the Nebraska Advantage Act (Act). Effective March 7, 2012 LB 1118 will provide additional sales and use tax incentives for large data center projects.
Under the terms of the bill, the definition of a qualified data center is amended and now includes computers, support equipment, and hardware or software that is designed to store, manage, or distribute data and information. Also included, are environmentally controlled structures or facilities that house the equipment such as, raised flooring, electrical supply, communication and data lines, Internet access, cooling systems, security, and fire suppression, and any building or facility that houses the qualified items.
Currently, there are six tiers that determine which incentives are available to taxpayers based on the taxpayer’s initial investment, new employee retention, and wages paid. However, LB 1118 added a new section to tier 2 that allows qualified data center projects to receive additional benefits if they invest at least $200 million and hire at least 30 new employees.
Large data center projects that meet the investment and hiring requirements will receive the regular tier 2 benefits which include a refund of all sales and use taxes paid during each year of the entitlement period, a tax credit based on the average wage of new employees, and an investment credit of 10% of the investment made in the project. In addition, a tier 2 large data center project will receive a personal property tax exemption for all personal property at the project.
Qualified data center projects may also use their tax credits to receive a cash payment from the state that is equal to all real property taxes paid through the carryover period or to obtain sales and use tax refunds for certain purchases used at the project. Credits must be used within 14 years.
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