Federal changes will cut state revenues about $100 million per year

Tax breaks passed by Congress and signed by President Trump earlier this year will reduce Nebraska state government revenues about $100 million a year, a new report says.

By law, when the federal tax code changes, the Nebraska Department of Revenue must estimate what effect those changes will have on state revenues. On Tuesday, the Department estimated that the so-called “One Big Beautiful Bill Act,” will cut state corporate income tax revenues by $63 million and individual income tax revenues by $39 million this fiscal year, with similar reductions in the next three fiscal years.

Federal provisions expected to cut state revenue include changes to itemized deductions for state and local taxes, and for buildings used for manufacturing, refining, agricultural or chemical production.

The projected cut in state revenue comes as the state’s already facing a $95 million expected budget shortfall next fiscal year. A shortfall of $100 million is a little less than 2% of the state’s general fund budget.