Nebraska LB 753 tax credits begin Monday

Nebraskans are now able to earn tax credits for making donations to certain scholarship-granting organizations working with private and faith-based schools. 

LB753, which passed the Nebraska Legislature earlier in 2023, took effect Monday. The law offers dollar-for-dollar tax credits to individuals and entities that make donations to scholarship funds intended to help students attend private or parochial schools.

Under the law, $25 million will be available for credits in 2024, with the same amount available for the next two years. After that, the limit for credits will grow to a maximum of $100 million per year. Individuals and businesses could not claim more than $100,000 in annual credits, while estates and trusts would be capped at $1 million per year.

The bill fell under heavy scrutiny that has continued after its passage, spawning a new group called Support Our Schools Nebraska that launched a successful petition drive that will let voters decide in November 2024 whether to repeal LB753. Before that happens, however, donations made prior to the general election will still be eligible for the tax credits. 

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But not all scholarship-granting organizations will earn tax credits for donors. Only organizations that have been certified by the Nebraska Department of Revenue qualify for the program. According to the department’s website, three organizations are certified so far: Opportunity Scholarships of Nebraska, Metro Area Christian Schools SGO, and Assistance Individuals and Families Without Borders. 

Both Opportunity Scholarships of Nebraska, led by advocates who fought against the petition, and MACS SGO, a coalition between Omaha Christian Academy and Lifegate Christian School, were established in the latter half of 2023 after passage of LB753. 

In contrast, AIF-Without Borders formed in 2014, and its executive director Laurent Kondohoma said the group heard about the program through the Department of Revenue. Among other things, the nonprofit helps children from low-income households access education, and Kondohoma said the donations they receive as part of LB753’s program will be held in a separate account for those purposes. 

Lauren Gage, director of marketing for Opportunity Scholarships of Nebraska and former state director of the American Federation for Children — which advocates for programs like LB753 — said the group already began accepting donations in 2023. While these donations won’t be eligible for tax credits, she said they will earn standard tax deductions as donations to a nonprofit. 

Opportunity Scholarships of Nebraska plans to make a bigger push for donations at the start of 2024, Gage said, and the amount of scholarships the group can offer will be heavily determined by the donations it receives. While it’s likely scholarships will not be available until the fall 2024 semester, Gage said the group hopes to provide scholarships earlier if possible. 

State Sen. Lou Ann Linehan of the Omaha area, who introduced LB753, said she’s already heard interest about this program from families and prospective donors, which she said shows the need for such a program. Kondohoma said AIF-Without Borders receives calls about the program every day. 

“I think the word is out,” Linehan said. 

Support Our Schools officials see it differently. In a recent social media post, the group highlighted several concerns about the tax credits. 

The group contended that the current setup of the program won’t help schools or families in rural Nebraska, as all three certified scholarship-granting organizations are located in the Omaha and Lincoln areas. The post also said the funding used for the tax credits removes state revenues that could support public schools.

Linehan said it will be easier to defend LB753 against the repeal effort once the program takes effect in 2024, as people will actually be able to see the benefits. The true tell, she said, will be when the scholarships are eventually handed out, arguing that this will show Nebraskans that the program is “critically important.”

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