Credit Unions & the Nebraska Property Tax Credit
In 2020 the Nebraska Legislature passed LB 1107, which created the refundable income tax credit program. The program allows property owners, including both state and federal credit unions, to receive a portion of the property taxes paid to public school districts through the income tax filing process. LB 873, passed in 2022, expanded the program to include taxes paid towards community colleges in the refundable income tax credit program.
The credit applies to property taxes paid on real property (land, buildings, residences) excluding taxes levied for bond repayments and taxes levied as a result of voter-approved overrides of levy limits. It does not apply to taxes paid on personal property like motor vehicles.
For tax year 2022, the credit rate was set at 30% of all property taxes paid towards public schools AND community colleges. For tax year 2023, the credit rate is set at 30% of all property taxes paid towards public schools and 55% of property taxes paid towards community colleges.
Getting started?
To claim your property tax credits, state credit unions must file a Nebraska Corporation Income Tax Return, Form 1120NF, and file Form PTC. Tax-exempt corporations (Federal Credit Unions) must file a Nebraska Corporation Income Tax Return, Form 1120N, and file Form PTC. For this, credit unions will need the tax dollar amount they paid on each piece of property towards schools and community colleges. Credit unions may use the Look-Up Tool to calculate the amount of school district and community college property taxes paid and enter the information provided by the look-up tool on Form PTC.
The 1120N for Federal Credit Unions will be blank except for reporting the tax credits on lines 24 and 25 and showing the total refundable tax credit on line 27. First time 1120N filers may want to include a notation that includes language such as, “________ Federal Credit Union is filing an 1120N for the first time. As a tax-exempt organization, ________ Federal Credit Union, is not required to file a federal or state tax return. Since _________ Federal Credit Union would not normally file a Nebraska 1120N tax return, we are doing so to report and claim our eligible school district and community college property tax credits”.
State chartered credit unions will report the property tax credits on lines 18 and 19 of Form 1120NF.
What if I didn’t claim my tax credits last year! Is it too late to receive those?
Tax credits for property taxes paid in 2021 and 2022 can still be claimed. State chartered credit unions should amend their Form 1120NF. Federal credit unions should amend Form 1120N. If a Federal Credit Union has not filed a Form 1120N for those years they will need to do so to claim the credits. Tax credits for property taxes paid in 2023 are claimed by filing Form PTC along with Form 1120N for Federal Credit Unions and 1120NF for State Credit Unions.
Credit unions are not eligible to file an amended Form PTCX to claim their tax credits, they must amend their return (Form 1120NF or Form 1120N) to claim their tax credits.
Click the following links for general information about the Property Tax Credit and Frequently Asked Questions:
- https://revenue.nebraska.gov/about/nebraska-property-tax-credit-general-information
- https://revenue.nebraska.gov/about/frequently-asked-questions/nebraska-property-tax-credit-faqs
Contact Dan Collins for additional information.
