Nebraska Faces $406 Million Tax Revenue Loss Over Four Years

Nebraska's Department of Revenue reports that the federal 'One Big Beautiful Bill,' signed into law by President Trump, will reduce the state’s income tax revenue by approximately $406.5 million over four fiscal years, with an estimated $102.5 million lost in the current fiscal year alone. The bill’s changes primarily affect corporate income taxes, accounting for 62 to 74 percent of the revenue reduction, and include expanded dependent care tax credits and other federal tax code adjustments that diminish state tax collections. This loss exacerbates Nebraska’s existing budget deficit, which was projected at $95 million prior to the bill’s passage, likely increasing the total shortfall to over $311 million for the current budget cycle. State officials, including Appropriations Committee Chair Sen. Rob Clements, acknowledge the revenue impact is greater than expected but maintain that the budget remains manageable, partly due to recent higher-than-anticipated tax receipts and the governor’s proposed 10% budget cuts. The Nebraska Economic Forecasting Advisory Board will integrate these findings in October to update state revenue projections, but lawmakers face difficult decisions on balancing the budget without raising taxes, given the state's recent history of tax cuts and spending reductions. Republican members of Nebraska’s congressional delegation, who supported the bill, have not commented on the state budget implications.