Revenue Committee
March 13, 2025
Committee Chair: Sen. Brad von Gillern | Bills Heard: 4 | Full Transcript (PDF)
LB169: Expand sales tax base by taxing previously exempt services
Introduced by: Sen. Tom Brandt | Testimony: 1 proponents, 15 opponents, 3 neutral | Read bill text (PDF)
Senator Brandt's 'luxury tax' bill would expand Nebraska's sales tax base to 21 previously exempt services, generating an estimated $37 million to help address the state's budget shortfall and fund property tax relief.
Why it matters: Nebraska has one of the nation's broadest sales tax exemptions. Broadening the base could help stabilize state finances and reduce pressure on property taxes, which have increased $285 million annually. But the bill faces fierce opposition from small business owners, service providers, and rural communities who argue it creates compliance burdens and drives consumers to unlicensed providers.
What they're saying:
Proponents: - Farm Bureau and agricultural groups support structural tax reform, acknowledging members will pay these taxes but recognizing the need to address the budget shortfall. - The bill targets discretionary services—pet grooming, tattoos, chartered flights, interior design—not necessities.
Opponents: - Movie theater owners say taxing film rentals amounts to double-taxation: they already collect sales tax on tickets, and film rental is their largest business expense. - Tattoo artists warn the tax will drive clients to unlicensed at-home providers, creating public health hazards. One artist noted tattoos can be life-changing for trauma survivors. - Small retailers say defining what qualifies as taxable (candy vs. food, interior design scope) is impossible to enforce and creates unfair burdens on mom-and-pop stores versus chains. - Zoo officials argue the exemption is essential to maintaining accessibility and supporting private philanthropy that generates $200+ million in annual economic impact. - Cosmetologists say the bill unfairly targets women, since 75% of female clients receive color services that would be taxed.
By the numbers: - 21 services targeted for taxation - $37 million estimated annual revenue - 15 opponent testimonies vs. 1 proponent testimony in person - $200+ million: annual economic impact of Henry Doorly Zoo
What's next: No vote was taken. The committee will likely continue discussions on specific provisions, particularly film rentals, which even supporters acknowledged may generate minimal revenue relative to the controversy.
Committee sentiment: Supportive: Sen. Mike Jacobson Skeptical: Sen. George Dungan, Sen. Teresa Ibach, Sen. Brad von Gillern Unclear: Sen. Eliot Bostar, Sen. Kathleen Kauth, Sen. Dave Murman, Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
LB170: Impose sales tax on pop, candy, and increase excise taxes on cigarettes and alcohol
Introduced by: Sen. Tom Brandt | Testimony: 1 proponents, 8 opponents, 2 neutral | Read bill text (PDF)
Senator Brandt's 'sin tax' bill would impose sales tax on pop and candy while raising excise taxes on cigarettes and alcohol, generating an estimated $80+ million to address the budget shortfall.
Why it matters: The state faces a $289 million budget shortfall. Broadening the tax base to include previously exempt items could help stabilize finances and fund property tax relief. But opponents warn the taxes are regressive, create compliance nightmares for small retailers, and will trigger border bleed as consumers shop in neighboring states with lower rates.
What they're saying:
Proponents: - Pop and candy are non-essential goods; many neighboring states already tax them. - Cigarette tax increase brings Nebraska closer to Iowa's rate and national average. - Revenue is needed to stabilize state finances and reduce property tax pressure.
Opponents: - Pop and candy taxes are regressive, hitting lower-income families hardest. - Defining what qualifies as taxable candy is complex; retailers face expensive compliance costs. - Border bleed is real: when Nebraska raised cigarette tax in 2002, sales dropped 25% while Iowa's increased 26%. - The bifurcated alcohol tax structure (different rates based on gallonage) likely violates the Commerce Clause and exposes the state to costly lawsuits. - Small rural retailers and convenience stores cannot absorb compliance costs that chain stores can. - Food deserts will worsen if rural grocery stores close due to tax burden.
By the numbers: - $40 million: estimated revenue from pop/candy tax - $42 million: estimated revenue from cigarette tax increase - $2.5 million: estimated revenue from alcohol tax (though constitutionality questioned) - 25%: drop in Nebraska cigarette sales after 2002 tax increase - 26%: increase in Iowa cigarette sales after Nebraska's 2002 increase
What's next: No vote was taken. The Liquor Control Commission raised serious constitutional concerns about the bifurcated alcohol tax structure. The committee will likely revisit definitions and compliance mechanisms for the pop/candy tax.
Committee sentiment: Supportive: Sen. Mike Jacobson Skeptical: Sen. George Dungan, Sen. Brad von Gillern Unclear: Sen. Eliot Bostar, Sen. Teresa Ibach, Sen. Kathleen Kauth, Sen. Dave Murman, Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
LB171: Pause scheduled income tax rate reductions
Introduced by: Sen. Tom Brandt | Testimony: 3 proponents, 3 opponents, 1 neutral | Read bill text (PDF)
Senator Brandt's income tax bill would pause scheduled rate reductions at 4.99%, preventing further cuts to 3.99%, to address a $289 million budget shortfall—but the committee is deeply divided on whether this is necessary fiscal responsibility or economic self-sabotage.
Why it matters: Nebraska faces structural budget deficits projected through 2029. The state has already cut income tax rates from 6.85% to 5.25% over two years. Pausing further cuts would generate $395 million in year one, rising to $737 million by year three. But business groups argue tax competitiveness is essential to attracting workers and companies in an increasingly mobile economy.
What they're saying:
Proponents: - This is not a tax increase; it merely pauses scheduled reductions. The state has already cut rates 2.85 percentage points. - The budget shortfall is real and structural. Without action, the state cannot fund education, health care, affordable housing, and property tax relief. - A 4.99% rate remains competitive with neighboring states (Kansas 5.58%, Missouri 4.7%). - Trigger mechanism could allow future cuts once budget stabilizes. - Agricultural families are struggling (corn prices at $4.12 vs. $8 two years ago) and need property tax relief, not income tax cuts.
Opponents: - A delay of scheduled tax cuts is functionally a tax increase. Businesses will view it as a 10-25% rate hike. - Tax cuts drive economic growth, which generates revenue. The Reagan tax cuts of 1986 triggered the greatest economic growth period in history. - The real problem is spending, not revenue. The state should control spending instead of pausing tax relief. - Income tax competitiveness is mission-critical for attracting remote workers and businesses relocating from high-tax states. - The Chamber of Commerce already achieved tax relief; pausing cuts breaks the promise to complete the reform.
By the numbers: - $395 million: foregone revenue in first full year - $737 million: foregone revenue by third year - 2.85%: income tax rate reduction already achieved (from 6.85% to 5.25%) - 4.99%: proposed pause rate - 3.99%: originally scheduled target rate
What's next: No vote was taken. The committee is clearly divided. Sen. Dungan suggested exploring a bifurcated approach where individual rates continue to decline while corporate rates freeze. Sen. von Gillern noted that S-corps and flow-through entities file through personal income tax, complicating any corporate-individual split. The bill will likely remain in committee pending further discussion on spending controls and trigger mechanisms.
Committee sentiment: Skeptical: Sen. George Dungan, Sen. Brad von Gillern Opposed: Sen. Mike Jacobson, Sen. Tony Sorrentino Unclear: Sen. Eliot Bostar, Sen. Teresa Ibach, Sen. Kathleen Kauth, Sen. Dave Murman
Sentiment estimated from questions and comments — not stated positions.
LB151: Create tax-deductible first-time homebuyer savings account
Introduced by: Sen. John Cavanaugh | Testimony: 4 proponents, 0 opponents, 0 neutral | Read bill text (PDF)
Senator Cavanaugh's first-time homebuyer savings account bill sailed through committee with no opposition, offering a low-cost way to help Nebraskans overcome the down payment barrier to homeownership.
Why it matters: Housing affordability is a critical issue. Nearly half of Nebraska households earning $75,000 or less spend over 30% of income on housing. Down payment and closing costs are major barriers to first-time homeownership. This bill creates a tax-incentivized savings mechanism that could help thousands of Nebraskans build wealth through homeownership.
What they're saying:
Proponents: - The bill addresses a real barrier: high upfront costs for down payments and closing costs. - Tax deduction incentivizes savings; larger down payments reduce mortgage insurance costs and improve loan terms. - Fiscal cost is minimal ($388,000 first year) relative to benefit. - Complements existing down payment assistance programs. - Homeownership drives community development and local economic growth. - Similar programs exist in other states, including Iowa.
Opponents: - None testified in person. One online opponent submitted no explanation.
By the numbers: - $2,000: annual deductible contribution limit (single filers) - $4,000: annual deductible contribution limit (married filing jointly) - $20,000: lifetime limit (single filers) - $40,000: lifetime limit (married filing jointly) - $388,000: estimated fiscal cost in first year - 44%: percentage of Nebraska households earning $75,000 or less spending over 30% of income on housing
What's next: No vote was taken. Committee members asked clarifying questions about income thresholds, holding periods, and whether parents could establish accounts for children. Sen. Bostar suggested exploring a NEST plan model (after-tax contributions with tax-deductible interest only) to potentially reduce fiscal cost to zero. Sen. Cavanaugh indicated openness to modifications. The bill appears likely to advance with broad support.
Committee sentiment: Supportive: Sen. Eliot Bostar, Sen. George Dungan, Sen. Brad von Gillern Unclear: Sen. Teresa Ibach, Sen. Mike Jacobson, Sen. Kathleen Kauth, Sen. Dave Murman, Sen. Tony Sorrentino
Sentiment estimated from questions and comments — not stated positions.
Session Notes
The Revenue Committee held a joint hearing on LB169 and LB170 (Senator Brandt's tax base expansion bills), followed by hearings on LB171 (income tax pause) and LB151 (first-time homebuyer savings account). The hearing lasted approximately 8 hours. Committee Chair von Gillern noted at the outset that this was "Brandt day," with three of four bills introduced by Senator Tom Brandt. The committee heard extensive testimony on the fiscal, economic, and policy implications of broadening the sales tax base, pausing income tax reductions, and creating homebuyer savings incentives. Key themes included: (1) the state's structural budget deficit and need for revenue; (2) concerns about regressivity and compliance burdens on small businesses; (3) border bleed and competitiveness with neighboring states; (4) the role of spending controls vs. revenue increases; and (5) property tax relief as a priority. No votes were taken on any bills. The hearing concluded with Senator Cavanaugh's LB151, which received unanimous support from testifiers and appeared likely to advance.
Generated by NE Wire Service | Source: Nebraska Legislature Transcribers Office This is an AI-generated summary. Verify all claims against the official transcript.