Bill
LB 331
Nebraska LB 331 replaces income, sales, and property taxes with a single EPIC consumption tax by 2027–28, repealing major tax programs and shifting to consumption-based taxation.
Nebraska LB 331 — Comprehensive Summary
Overview
- Bill number and title: LB 331, the Nebraska EPIC Option Consumption Tax Act. EPIC stands for the elimination of property, income, and corporate taxes.
- Introduced: January 16, 2025 by Hardin (Legislature of Nebraska, 109th Legislature, First Session).
- Status: Hardin MO32 prevailed (motion to LB331). This indicates a procedural motion related to the bill, but the bill’s substantive text presents a complete framework for a broad tax overhaul.
- Committee: Revenue
- Purpose: Create a new consumption-based tax system (EPIC) while terminating a broad set of existing state and local tax provisions, effectively replacing the current tax structure with a single consumption tax regime.
Key Provisions (Substantive changes in LB 331)
- Enactment of the Nebraska EPIC Option Consumption Tax Act
- Establishes a new framework for a consumption tax to replace multiple existing taxes.
- Defines key terms to govern how the tax is calculated and collected (see definitions; summarized below).
- Termination and repeal of existing taxes and related provisions
- Repeals or terminates major tax regimes and related statutes, including:
- State income tax (Nebraska Revenue Act of 1967)
- State sales and use taxes (and related local taxes)
- The Nebraska Budget Act (planning and budgeting framework)
- Tax-increment financing provisions
- Motor vehicle tax and motor vehicle fee
- Property tax regime
- Inheritance tax
- Homestead exemption
- Tax Equity and Educational Opportunities Support Act (TEOP)
- ImagiNE Nebraska Act (application deadline and related provisions)
- Repeal of certain original sections as part of the transition to the EPIC system
- Definitions and scope (Section 2)
- Affiliated firms: Entities sharing control (e.g., 50%+ ownership of voting shares or capital interests).
- Consumption tax: The tax imposed under the EPIC Act.
- Designated commercial private courier service: A firm designated by the Tax Commissioner for EPIC purposes, with specific recordkeeping requirements (electronic records of delivery dates).
- Education and training: Includes tuition for primary/secondary/postsecondary education and job-related training (excludes unrelated activities such as room/board or hobbies).
- Gross payments, intangible property, and other property classifications: Detailed definitions to determine what is taxable under EPIC.
- Taxable property or service: Broadly includes most property and services used to produce or sell taxable property/services, with specific exclusions (notably intangible property and certain non-business uses).
- Used property: Criteria for property that has already had EPIC tax paid or is otherwise subject to transition rules.
- Registered seller: Persons registered under the act.
- Taxable employer: Definitions for who is subject to EPIC in relation to employment.
- Tax Commissioner: State Tax Commissioner as administrator.
- Tax base and administration concepts (Section 2)
- Tax-inclusive fair market value: FMV plus EPIC tax.
- Treatment of wages, insurance, and employment-related considerations within EPIC.
- Transition and effective timing (Section 3)
- Repeal of the state income tax by end of December 31, 2027.
- Taxes currently subject to the EPIC regime (income tax, sales/use tax, etc.) would be repealed; the Department of Revenue may collect overdue taxes from 2027 in 2028, but income earned in 2028 would not be subject to income tax.
- The precise timing for full transition to the EPIC system is anchored to 2027–2028, with ongoing administration by the Tax Commissioner.
Who Is Affected
- Individuals and households: Would face a shift from current income tax and many taxes to EPIC consumption taxation; impact on take-home income depends on EPIC rate and tax base.
- Businesses and employers: Subject to the EPIC consumption tax on taxable property and services, including intra-business purchases and capital transactions; affiliated firms and related party transactions defined for compliance.
- Tax agencies: Department of Revenue would administer and collect the EPIC tax and manage the transition away from the current tax structure.
- Local governments: Repeal of local sales/use taxes and other tax provisions could affect local revenue structures (to be aligned with the EPIC framework).
Procedural and Timeline Notes
- Introduced and referred to the Revenue Committee in January 2025.
- Core transition plan targets end of 2027 for repealing the state income tax; 2028 for collecting any 2027 taxes, with 2028 income not subject to income tax.
- Major policy shift requires repeal of a broad suite of existing taxes and programs, and consolidation under a single consumption-based levy.
Key Takeaway
LB 331 proposes a sweeping replacement of Nebraska’s tax system with a single EPIC consumption tax, phasing out income, property, sales, and many other taxes by 2027–2028, while establishing detailed definitions and administrative rules to implement and enforce the new regime. The bill would also terminate several targeted tax programs and exemptions as part of a comprehensive overhaul.
Compiled from official sources — confirm details with the bill’s official record.
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