LINCOLN, Neb. (AP) — Nebraska lawmakers approved a corporate income tax cut Friday designed to bring the rate closer to the one paid by small business owners, despite objections that the lost revenue could be used for other purposes.

Senators voted the measure through its third and final vote, 42-1, and sent it to Republican Gov. Pete Ricketts, who’s expected to sign it.

The measure would drop Nebraska’s top corporate income tax rate from 7.81% to 7.25% over two years. The estimated revenue losses to the state would grow each year, from $1.9 million in the upcoming fiscal year to $26 million by fiscal year 2025.

Supporters said the measure would bring the corporate income tax rate more in line with the rate paid by smaller businesses, which are often set up to pay taxes as individuals rather than corporations. The top individual income tax rate in Nebraska is 6.84%.


Backers initially proposed lowering the corporate rate to match the individual rate, but scaled back the bill as a compromise. Sen. Lou Ann Linehan, of Omaha, said reducing the rate would make Nebraska less reliant on complicated tax incentives to try to bring new employers to the state.

“We are simply trying to bring that rate down to the rate that other companies pay,” said Linehan, chairwoman of the tax-focused Revenue Committee. “It’s a matter of fairness.”

Still, the bill faced a filibuster from opponents who railed against it as a taxpayer-funded giveaway to corporations that don’t need it, in a state with the nation's lowest unemployment rate

Sen. Machaela Cavanaugh, of Omaha, blasted lawmakers who supported it, especially those who on Tuesday helped defeat her bill to offer state aid to more than 800 Nebraska families with disabled children. Cavanaugh has used procedural tactics over the last several days to grind the Legislature to a halt and publicly shame those who killed her proposal.

“It is not our job to have corporate welfare,” Cavanaugh said. “It is our job to take care of the most vulnerable people in this state.”

Even some staunch conservatives criticized the measure. Sen. Mike Groene, who has fought for years to lower property taxes in his rural, western district, said he was concerned that the corporate tax cut would lead to a future budget shortage, and that lawmakers would respond by raiding the state’s property tax credit fund, which is used to lower property tax bills. Groene, of North Platte, said he doesn’t believe lawmakers have the “bravery” to meaningfully cut state spending.

“We do not need a corporate income tax cut,” said Groene, who abstained from voting on the bill. “There’s no good reason for it. None.”