The State of Nebraska has temporarily halted efforts to enforce a new law aimed at denying tax incentives to companies connected to China, following concerns from the business community and recent investigative reporting.
The law, championed by Governor Jim Pillen and passed last year, included a provision designed to prevent Chinese businesses from receiving state tax incentives. However, the law broadly defined a “foreign adversarial company” as any company with a subsidiary in China. That definition raised alarm among Nebraska business leaders because many major American companies operate subsidiaries in China as part of their global operations.
Reporting by Flatwater Free Press identified more than 50 Nebraska-based companies — employing thousands of residents — that could be impacted by the incentives ban due to their Chinese subsidiaries. Well-known companies such as Valmont, Lindsay, and Werner were among those potentially affected.
The Nebraska Department of Revenue had begun notifying some businesses that they might be ineligible to use previously earned tax incentive credits because of the new law, which took effect October 1. That action raised legal concerns among tax attorneys, who noted that many of those incentives are tied to signed agreements between the companies and the state.
In updated guidance dated February 12, the Department of Revenue announced it is pausing enforcement of the foreign adversarial company incentive ban for programs with agreements signed prior to October 1, 2025, while further analysis is conducted.
Despite the pause, the law remains in place. Any permanent change would require action by the Nebraska Legislature. Governor Pillen’s office has indicated that follow-up legislation may be introduced to clarify that the ban is intended to apply only to Chinese-owned companies, not American companies with subsidiaries in China.
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