Nebraska Expands Sales Tax Exemptions: Supporting Non-Profits, Agriculture, and Construction

  1. Sales Tax Exemptions for Nonprofit Organizations Providing Behavioral Health Services: Nonprofit organizations that are certified or contracted to provide mental health or substance use services by certain authorities in Nebraska will not have to pay sales or use tax on their purchases starting from October 1, 2023. This exemption aims to support nonprofits in their crucial work in the community by reducing their operating costs.
  2. Sales Tax Exemption for Commercial Agriculture: Beginning October 1, 2023, baling wire and twine purchased for use in commercial agriculture activities will be exempt from sales tax. This exemption is likely intended to ease the financial burden on agricultural businesses and encourage growth in the agriculture sector.
  3. Recognition of Purchasing Agents for Construction Contractors: Construction contractors can appoint purchasing agents to buy materials tax-free on their behalf. These materials must be physically attached to structures and belong to the client. The appointment must be in writing before the tax-exempt items are annexed to real estate. The contractor, acting as a purchasing agent, can then purchase materials tax-free, apply for a refund, or use the tax exemption as a credit against future use tax liabilities. This provision helps streamline the procurement process for construction projects and may reduce costs for contractors and their clients. This change applies beginning July 1, 2026.

These changes could have various implications:

Potential Savings: Taxpayers who fall under the exempted categories (such as nonprofit organizations providing behavioral health services or commercial agriculture businesses) can save money on their purchases by not having to pay sales or use tax.

Increased Efficiency for Construction Contractors: Construction contractors can save time and money by appointing purchasing agents to handle tax-free purchases of materials for their projects. This can result in cost savings for both the contractors and their clients.

Overall, these changes aim to support specific sectors of the economy, reduce financial burdens on certain organizations, and streamline processes for construction projects. (Nebraska Department of Revenue Legislative Bill 727, July 2023)

Posted on February 12, 2024