Nebraska Tax Credit for Micro Businesses
Department of Revenue has up to $2 million available in tax credits for qualifying applicants

As the new year gets underway, we turn our attention to that important annual ritual … filing tax returns. In Nebraska, there is a tax credit you may not know about – the Nebraska Advantage Microenterprise Tax Credit.

This initiative provides investment tax credits to individuals for creating or expanding microenterprises (businesses with five or fewer employees). The business must contribute to the revitalization of economically depressed areas by creation of improved income, self-employment, or other new jobs.

If you plan to start or expand a small business in a qualifying area, you can file an application for the Microenterprise Tax Credit with the Nebraska Department of Revenue. You must supply a description of the business and several other pieces of information.

Projected income and expenditures, market reach, projected investment increase, projected improvement in income or creation of new self-employment or other jobs in the distressed area, and the applicant’s role in the micro business are required for the application. You must be able to show personal involvement on a continuous basis in the daily management and operation of the business.

Approved applicants will be entitled to a refundable investment tax credit equal to 20 percent of the taxpayer’s new investment (up to $10,000 lifetime tax credit) in a microenterprise located in a community that qualifies based on local unemployment, per capita income, population loss, and other criteria. The department’s website lists eligible communities; check www.revenue.ne.gov and select the Tax Incentives/Microenterprise options.

The Department of Revenue will authorize tentative investment tax credits to approved applicants. Applications will be considered on a first come first served basis, so it pays to apply early. Those receiving benefits under the Employment and Investment Growth Act, the Employment Expansion and Investment Incentive Act, or the Nebraska Advantage Act are ineligible.

The Nebraska Advantage Microenterprise Tax Credit will expire on January 1, 2011 and is limited to $2 million annually. The clock is ticking for 2007.