Nevada businesses to get tax cut
Nevada businesses will get a tax cut next year because collections from the business and commerce taxes both came in significantly higher than projected.
Under state statute, those taxes are allowed to grow by up to 4 percent a year but, if they exceed that, the Department of Taxation has to lower the rate they pay for the Modified Business Tax to reduce next year’s revenues to what would’ve been 4 percent growth.
Taxation Director Bill Anderson told the Economic Forum on Thursday the state collected $786.5 million from the 1.475 percent MBT, the 2 percent MBT on mining and financial institutions, the commerce tax and bank branch excise tax.
Anderson said that’s 10.1 percent or $72 million more than the $714.5 million they were projected to bring in.
He said adding 4 percent to that projection caps what those taxes were allowed to bring in at about $743 million so rates must be lowered to return the excess to businesses.
For the 2020 fiscal year, he said, the department will reduce the general business rate from 1.475 percent to 1.378 percent. The 2 percent mining/financial rate will be cut to 1.853 percent.
He said if these lower rates had been in effect this fiscal year, it would’ve reduced the total tax burden on Nevada businesses by $43.5 million.
More than 133,000 businesses in Nevada filed commerce tax returns but since that levy only applies to businesses that grossed more than $4 million a year, only 6,500 had to pay anything. The commerce tax by itself generated $202 million in fiscal 2018.
The MBT is imposed on general business, mining and financial institution wages. The MBT generated $581.8 million in fiscal 2018.
The final piece of the puzzle is the $2.7 million collected from the Bank Branch Excise Tax, bringing the total to $786.5 million.