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Laura Strimple, (402) 580-9495
Gov. Pillen Touts Historic Income Tax Relief
LINCOLN, NE – Governor Jim Pillen released the following statement after the Tax Rate Review Committee met to review the State’s fiscal position. The Committee has again supported the established tax rates.
“It’s pretty simple: Nebraskans should be able to keep more of what they earn,” said Gov. Pillen. “By signing historic income tax relief into law, we’re giving families and seniors in our state a boost. When we shrink government and cut spending, we can focus on providing better outcomes and improving services for everyone in our state. There’s more work to do to drive down taxes in this state, but our goal is to keep fighting to make Nebraska – for generations to come – the best place to live, work, and raise a family.”
The Committee review is great news for Nebraska families and businesses who will see income tax rates fall from 5.2% to 4.55% this coming January, and down again to 3.99% beginning 2027. The reduced tax rates were set in motion in 2023 by legislation introduced on behalf of Governor Pillen.
Today, the Committee reviewed end of year numbers for fiscal year 2025 and projections for the next two fiscal years. The July financial status report includes assumptions which will be updated prior to the October meeting of the Nebraska Economic Forecasting Advisory Board. State spending was under budget last year by $362 million. Some of this will be used for prior year obligations and $36 million is projected to lapse back to the General Fund. Compared with current projections, we are likely to see a higher lapse of unspent prior year funds, less mid-biennium spending, and higher reserve balances.
The Committee also acknowledged a calculated variance from the required $337 million surplus reserve. The $47.7 million needed in each year to shore up the variance is equivalent to less than a percent of annual revenue and is well below Governor Pillen’s targeted budget reductions. The total reserve, including the surplus reserve, is expected to remain above $1 billion. The impact of the Governor’s spending reductions will be finalized during the 2026 legislative session.
