Tax Break for Hiring Felons Included in Nebraska Bill

Nebraska businesses that hire felons could get a tax break under a measure that’s designed to make it easier for them to get jobs and reduce the likelihood they’ll re-offend.

Supporters say the bill before Nebraska lawmakers would encourage employers to take a risk on potential employees whose criminal records limit their job prospects, although it’s not yet clear how supporters would cover the cost of the proposed tax deduction.

“We’re trying to make sure people have jobs once they’re released from prison,” said the bill’s sponsor, Sen. Justin Wayne, of Omaha. “We need to make sure we have businesses that are willing to hire them.”

The vast majority of Nebraska’s prisoners will return to society at some point, and studies commissioned by the U.S. Justice Department have found that inmates who find a steady job after their release are less likely to reoffend.

The measure introduced last week would allow companies to deduct 65% of the wages paid to workers with a felony conviction during their first year of employment. The maximum deduction would be capped at $20,000 per employee.

Iowa, Louisiana and Texas have similar laws.

The bill would cost the state about $2.4 million a year in lost revenue starting in fiscal year 2021. Wayne said he was still looking for ways to cover the cost.

Wayne introduced a similar bill last year but it failed to advance out of the Legislature’s tax-focused Revenue Committee.

Sen. Lou Ann Linehan, the chairwoman, said committee members didn’t act last year because the measure hadn’t received a priority designation that would have put it ahead of other bills to be debated.

With limited time and a state revenue shortfall last year, all bills that weren’t prioritized fell by the wayside. This year, lawmakers have an estimated $1 26.3 million in surplus tax revenue at their disposal in the current two-year budget cycle.

Nebraska has about 34,000 available jobs listed on NEworks, a state-run website that connects employers and prospective workers. The state’s seasonably adjusted unemployment rate was 3.1% as of November, compared to a national rate for that month of 3.5%, according to the U.S. Bureau of Labor Statistics.

But a far higher percentage of felons are unemployed. Nationally, the unemployment rate for people who were formerly incarcerated hovers at around 27%, according to a 2018 analysis by the Prison Policy Initiative, a national research and advocacy group.

Nebraska has already taken some steps to help prisoners find jobs, including a state-sponsored Workforce Academy that prepares inmates for job interviews, said Grace Johnson, a spokeswoman for the Nebraska Department of Labor.

Johnson said the program is a joint effort with the Nebraska Department of Correctional Services and includes resume and job application assistance, mock interviews and an assessment of inmates’ skills.

Employers can also claim a federal tax credit of up to $2,400 for hiring ex-offenders, Johnson said.

Business groups haven’t yet said whether they’ll endorse the measure. The Lincoln Independent Business Association threw its support behind last year’s bill, but the group won’t decide until later this month which bills it will back, said Dustin Antonello, the group’s policy and research director.

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