Nebraska wrapped up its 2024-2025 fiscal year with tax revenues falling short of expectations by $86 million, signaling renewed budget pressures for state lawmakers heading into next session.
According to a report released Tuesday by the Nebraska Department of Revenue, June’s tax receipts — the final month of the fiscal year — came in about $4 million below projections, or roughly 0.5% under the estimate from the state’s forecasting board. That shortfall capped a year where total net receipts missed the mark by 1.4%.
Legislative Fiscal Analyst Keisha Patent confirmed the updated figures place the state back into a budget deficit, though the precise number will be detailed at next week’s Tax Rate Review Committee meeting.
Earlier this year, lawmakers worked through a fluctuating projected shortfall that reached as high as $432 million before settling on a budget plan that forecasted a modest $4 million surplus. However, back-to-back months of underwhelming revenue collection — including May’s 14% shortfall totaling $82 million — have reversed that trend.
Much of the recent drop is attributed to underperformance in individual and corporate income tax revenues. In June alone, individual income taxes fell $30.3 million short — nearly 12% below forecast — while corporate income taxes were down $9.6 million, or nearly 7%.
Officials point to Nebraska’s pass-through entity tax (PTET) law as a likely factor, shifting the timing of when some revenues are received without actually reducing the state’s overall tax liability. Meanwhile, phased-in tax cuts for both individuals and corporations may also have played a role, though those were factored into the original revenue estimates.
One bright spot in the report came from the miscellaneous tax category — which includes alcohol and cigarette taxes — where revenue was $33.3 million above expectations. However, much of that increase appears tied to legislative transfers from cash reserves into the general fund, not necessarily higher consumer activity.
Despite the shortfall, Appropriations Committee Chair Sen. Rob Clements said there’s no immediate cause for concern or need for budget adjustments before the next legislative session. At this point, there’s also no indication Governor Jim Pillen is planning to call a special session in response.
Still, Speaker of the Legislature John Arch recently cautioned that balancing the budget will be the top challenge in 2026, especially given ongoing uncertainty surrounding federal funding.
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