LINCOLN — A new “One Big Beautiful Bill” unveiled Wednesday will be the last train out of Nebraska’s 2025 legislative session for additional property tax relief this year.

The new amendment to Legislative Bill 170, led by State Sen. Tom Brandt of Plymouth, would inject an additional $100 million each year into property tax relief, which would come at the cost of sales taxes being added to 20 currently exempt goods and services, effective Oct. 1, and increasing nicotine-based taxes on vapes (by 30%) and cigarettes (by 72 cents), effective July 1.

Proposed targets for expanded sales taxes range from animal grooming and dating services to lobbying and chartered flights, as well as soft drinks and energy drinks.

Supporters have dubbed the LB 170 package as “One Big Beautiful Bill” in a nod to a federal spending package working its way through Congress with President Donald Trump’s support.

“It’s why I came here,” State Sen. Jana Hughes of Seward, who worked with Brandt on the package, said of property tax relief. “It’s all I heard about.”

Estimated new tax revenue under LB 170 package

  • $42 million — 72-cent increase on cigarette taxes, up to $1.36.
  • $28 million — sales taxes on 18 currently exempt “optional” goods or services.
  • $25 million — sales taxes on soft drinks and energy drinks.
  • $15 million — increasing vape taxes from 10% to 40% wholesale.

The only viable path to additional property tax relief this year requires the proposed revenue streams in LB 170, because lawmakers advanced, and will more than likely pass Thursday, budget bills leaving about $1.1 million to spend on other priorities.

That calculation includes proposed 1.5% increases to judges’ salaries each of the next two years that lawmakers have signaled they intend to pass.

Brandt said he was pleased to get through the budget “in pretty good shape” and praised the Appropriations Committee for its work. 

“Now we can go back to working on broadening Nebraska’s tax base,” Brandt said.

Opponents, including progressives and some conservatives, refused to vote for what they saw as a reliance on sales and “sin” taxes that they said would “shift” the burden onto low-income or middle-class working Nebraskans. Scaled-back proposals also failed to gain traction.

New sales taxes

Under Brandt’s proposal, sales taxes would be added to 20 goods and services, as well as to soft drinks and energy drinks, a smaller subset than he previously proposed in LB 169. Taken together, the new sales taxes would generate about $53 million each year ($25 million of which is projected to come from pop or energy drinks alone). The package would not add sales taxes to candy, as had been proposed in LB 170.

The full list of new goods or services that would be subject to the sales tax if the bill passes:

  • Animal grooming of pets (grooming of livestock would continue to be exempt).
  • Chartered flights.
  • Dry cleaning or other cleaning of clothing (excluding coin-operated laundromats).
  • Dating services.
  • Interior design and decorating services.
  • Lobbying services.
  • Local passenger transportation by chartered road vehicles, including limousines or similar “luxury” vehicles.
  • Telemarketing services.
  • Telefloral delivery services for out-of-state purchasers of items to be delivered in Nebraska.
  • Personal instruction services for dance, golf or tennis.
  • Sightseeing services by ground vehicles.
  • Swimming pool cleaning and maintenance services.
  • Travel agency services.
  • Massage therapy services (excluding medical).
  • Nail care services (excluding medical).
  • Skin care services (excluding medical).
  • Tattoo or body modification services (excluding medical).
  • Weight loss services (excluding medical).
  • “Soft drinks” — nonalcoholic beverages that contain natural or artificial sweeteners, excluding drinks that contain milk or milk products; soy, rice or similar milk substitutes; or greater than 50% of vegetable or fruit juice by volume.
  • “Energy drinks” — carbonated or noncarbonated beverages containing a stimulant such as fortified caffeine, guarana, glucuronolactone or taurine “specifically formulated to enhance energy, alertness or physical performance.”

Brandt said that when he and other lawmakers determined which items to consider adding state and local sales taxes to, at 5.5 cents for the state, plus local taxes of up to 1.5 cents, he said “optional” items were the focus. Lawmakers also tried to tread carefully, he said, on massage, nail care, skin care or tattoo/body modification services that are for medical reasons.

Increased ‘sin’ taxes

Under the amendment to LB 170, taxes on cigarettes would increase from 64 cents per 20-pack to $1.36, the same as Iowa. Estimates that Brandt provided indicate it would generate about $42 million each year.

Lawmakers would distribute about 88% of the tax to the state’s general fund. That’s a greater share than under current law, at about 77% of the tax. Revenue is currently divided among multiple cash funds, including for cancer research, outdoor recreation development and construction.

The package also includes LB 712, from Hughes, to create a uniform 40% tax on electronic nicotine delivery systems, or vapes. It’s estimated to generate about $15 million each year.

The current system, which Hughes established in 2023, taxes vapes containing 3 milliliters or more of consumable nicotine at 10% of wholesale price, or 5 cents per milliliter on smaller devices.

Also included is LB 212, from State Sen. Dave Wordekemper of Fremont, which aims to close a “loophole” on taxes on cigars, cheroots or stogies purchased online from out-of-state retailers, subjecting those to a 20% excise tax. Estimates that Brandt provided indicate it would generate about $100,000 each year.

Last train out of the station

The property tax relief push might also be paired with tweaks to the 2023-enacted income tax cuts that will drop income tax rates for corporations and anyone making more than $18,000 down to 3.99% by Jan. 1, 2027. Rather than pausing the reductions, as in Brandt’s LB 171, some senators have suggested a longer stair-step down to 3.99%, by 2029 rather than 2027.

Last month, Pillen called pausing the rate reduction a “a crazy thought.” He has vowed to keep property taxes flat and said he was “100% confident” that lawmakers would deliver property tax relief.

A separate tax relief measure at Pillen’s request, LB 303 from Hughes, advanced from the Education Committee last week but has been significantly changed. It no longer includes a highly supported provision to directly lower school property tax rates, which is an alternative to increasing property tax credits to offset school property taxes.

Instead, the measure includes only a committee to review and suggest long-term changes to how the state finances K-12 schools, with property tax relief in mind.

Property taxes in recent years have grown annually by about $285 million. Last year was a noteworthy exception, with the state taking on the property tax portion of funding community colleges. Property taxes declined by $6 million last year off of a $5.3 billion total. 

LB 170 will likely be debated Monday, multiple senators said. That discussion is expected to last eight hours.

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