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LEGISLATIVE BILL 748
Approved by the Governor April 14, 2026
Introduced by Sorrentino, 39.
A BILL FOR AN ACT relating to revenue and taxation; to amend sections 77-1416,
77-1417, 77-1419, 77-1420, 77-1422, and 77-1427, Revised Statutes
Supplement, 2025; to define and redefine terms; to change provisions
relating to the Nebraska educational savings plan trust and allow for the
use of trust funds for recognized postsecondary credential programs as
prescribed; to harmonize provisions; and to repeal the original sections.
Be it enacted by the people of the State of Nebraska,
Section 1. Section 77-1416, Revised Statutes Supplement, 2025, is amended
to read:
77-1416 For purposes of sections 77-1415 to 77-1430:
(1) Administrative fund means the Education Savings Plan Administrative
Fund created in section 77-1420;
(2) Beneficiary means the individual designated by a participation
agreement to benefit from advance payments of qualified education expenses on
behalf of the beneficiary;
(3) Benefits means the payment of qualified education expenses on behalf
of a beneficiary or, in the case of a qualified education loan payment, on
behalf of a beneficiary or the sibling of a beneficiary by the Nebraska
educational savings plan trust;
(4) Eligible postsecondary educational institution means an institution
described in 20 U.S.C. 1088 which is eligible to participate in a program under
Title IV of the federal Higher Education Act of 1965;
(5) Expense fund means the Education Savings Plan Expense Fund created in
section 77-1420;
(6) Nebraska educational savings plan trust means the trust created in
section 77-1417;
(7) Nonqualified withdrawal refers to (a) a distribution from an account
to the extent it is not used to pay the qualified education expenses of the
beneficiary or, in the case of a qualified education loan payment, to the
extent it is not used to pay the qualified education expenses of the
beneficiary or a sibling of the beneficiary or to the extent it does not
constitute a rollover to a Roth individual retirement account as permitted by
section 529 of the Internal Revenue Code, (b) a qualified rollover permitted by
section 529 of the Internal Revenue Code where the funds are transferred to a
qualified tuition program sponsored by another state or entity, or (c) until
January 1, 2029, a distribution from an account to pay the costs of attending
kindergarten through grade twelve;
(8) Participant or account owner means an individual, an individual's
legal representative, or any other legal entity authorized to establish a
savings account under section 529 of the Internal Revenue Code who has entered
into a participation agreement for the advance payment of qualified education
expenses on behalf of a beneficiary. For purposes of section 77-2716, as to
contributions by a custodian to a custodial account established pursuant to the
Nebraska Uniform Transfers to Minors Act or similar law in another state, which
account has been established under a participation agreement, participant
includes the parent or guardian of a minor, which parent or guardian is also
the custodian of the account;
(9) Participation agreement means an agreement between a participant and
the Nebraska educational savings plan trust entered into under sections 77-1415
to 77-1430;
(10) Program fund means the Education Savings Plan Program Fund created in
section 77-1420;
(11) Qualified education loan payment means the payment of principal or
interest on a qualified education loan as defined in 26 U.S.C. 221(d), as such
section existed on January 1, 2022, of the beneficiary or a sibling of the
beneficiary as described in 26 U.S.C. 152(d)(2)(B), as such section existed on
January 1, 2022. For purposes of this subdivision, the aggregate total of
qualified education loan payments for the qualified education loans of a single
beneficiary or sibling shall not exceed ten thousand dollars for all taxable
years combined. The aggregate total for qualified education loan payments for
the qualified education loans of a sibling of a beneficiary shall be calculated
with respect to such sibling and not with respect to the beneficiary and shall
include all qualified education loan payments for loans of such sibling,
including any qualified education loan payments for which such sibling is the
beneficiary or the sibling of a beneficiary;
(12)(a) Qualified education expenses means:
(i) The certified costs of tuition, fees, books, supplies, and equipment
required (A) for enrollment or attendance at an eligible postsecondary
educational institution or (B) for costs incurred on or after January 1, 2021,
for participation in an apprenticeship program registered and certified with
the United States Secretary of Labor under 29 U.S.C. 50, as such section
existed on January 1, 2021;
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(ii) Reasonable room and board expenses, based on the minimum amount
applicable for the eligible postsecondary educational institution during the
period of enrollment for those students enrolled on at least a half-time basis;
(iii) In the case of a special needs beneficiary, expenses for special
needs services incurred in connection with enrollment or attendance at an
eligible postsecondary educational institution;
(iv) Expenses paid or incurred on or after January 1, 2022, for the
purchase of computer technology or equipment or Internet access and related
services in connection with enrollment or attendance at an eligible
postsecondary educational institution, subject to the limitations set forth in
section 529 of the Internal Revenue Code;
(v) Qualified education loan payments; or
(vi) Qualified postsecondary credentialing expenses as defined in section
529(f) of the Internal Revenue Code; or
(vii) (vi) Beginning January 1, 2029, expenses as defined in section
529(c)(7) of the Internal Revenue Code for tuition in connection with
enrollment or attendance at an elementary or secondary school but does not
include any amounts in excess of ten thousand dollars per beneficiary per
taxable year.
(b) Qualified education expenses does not include any amounts in excess of
those allowed by section 529 of the Internal Revenue Code;
(13) Recognized postsecondary credential program means a program described
in section 529(f)(2) of the Internal Revenue Code;
(14) (13) Section 529 of the Internal Revenue Code means such section of
the code and the regulations interpreting such section; and
(15) (14) Tuition means:
(a) Beginning January 1, 2029, for purposes of an elementary or secondary
school, the charges imposed for tuition in connection with enrollment or
attendance at such elementary or secondary school; and
(b) For purposes of an eligible postsecondary educational institution, the
quarter or semester charges imposed to attend an eligible postsecondary
educational institution.
Sec. 2. Section 77-1417, Revised Statutes Supplement, 2025, is amended to
read:
77-1417 The Nebraska educational savings plan trust is created. The State
Treasurer is the trustee of the trust and as such is responsible for the
administration, operation, and maintenance of the program and has all powers
necessary to carry out and effectuate the purposes, objectives, and provisions
of sections 77-1415 to 77-1430 pertaining to the administration, operation, and
maintenance of the trust and program, except that the state investment officer
shall have fiduciary responsibility to make all decisions regarding the
investment of the money in the administrative fund, expense fund, and program
fund, including the selection of all investment options and the approval of all
fees and other costs charged to trust assets except costs for administration,
operation, and maintenance of the trust as appropriated by the Legislature,
pursuant to the directions, guidelines, and policies established by the
Nebraska Investment Council. The State Treasurer may adopt and promulgate rules
and regulations to provide for the efficient administration, operation, and
maintenance of the trust and program. The State Treasurer shall not adopt and
promulgate rules and regulations that in any way interfere with the fiduciary
responsibility of the state investment officer to make all decisions regarding
the investment of money in the administrative fund, expense fund, and program
fund. The State Treasurer or his or her designee shall have the power to:
(1) Enter into agreements with any eligible postsecondary educational
institution, the state, any federal or other state agency, or any other entity
to implement sections 77-1415 to 77-1430, except agreements which pertain to
the investment of money in the administrative fund, expense fund, or program
fund;
(2) Enter into agreements with any recognized postsecondary credential
program to implement sections 77-1415 to 77-1430, except agreements which
pertain to the investment of money in the administrative fund, expense fund, or
program fund;
(3) (2) Beginning January 1, 2029, enter into agreements with any
elementary or secondary school to implement sections 77-1415 to 77-1430, except
agreements which pertain to the investment of money in the administrative fund,
expense fund, or program fund;
(4) (3) Carry out the duties and obligations of the trust;
(5) (4) Carry out studies and projections to advise participants regarding
present and estimated future qualified education expenses and levels of
financial participation in the trust required in order to enable participants
to achieve their educational funding objectives;
(6) (5) Participate in any federal, state, or local governmental program
for the benefit of the trust;
(7) (6) Procure insurance against any loss in connection with the
property, assets, or activities of the trust as provided in section
81-8,239.01;
(8) (7) Enter into participation agreements with participants;
(9) (8) Make payments to elementary or secondary schools , or eligible
postsecondary educational institutions , or recognized postsecondary credential
programs pursuant to participation agreements on behalf of beneficiaries and
make qualified education loan payments on behalf of beneficiaries or their
siblings;
(10) (9) Make distributions to participants upon the termination of
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participation agreements pursuant to the provisions, limitations, and
restrictions set forth in sections 77-1415 to 77-1430;
(11) (10) Contract for goods and services and engage personnel as
necessary, including consultants, actuaries, managers, legal counsels, and
auditors for the purpose of rendering professional, managerial, and technical
assistance and advice regarding trust administration and operation, except
contracts which pertain to the investment of the administrative, expense, or
program funds; and
(12) (11) Establish, impose, and collect administrative fees and charges
in connection with transactions of the trust, and provide for reasonable
service charges, including penalties for cancellations and late payments with
respect to participation agreements.
The Nebraska Investment Council may adopt and promulgate rules and
regulations to provide for the prudent investment of the assets of the trust.
The council or its designee also has the authority to select and enter into
agreements with individuals and entities to provide investment advice and
management of the assets held by the trust, establish investment guidelines,
objectives, and performance standards with respect to the assets held by the
trust, and approve any fees, commissions, and expenses, which directly or
indirectly affect the return on assets.
Sec. 3. Section 77-1419, Revised Statutes Supplement, 2025, is amended to
read:
77-1419 The Nebraska educational savings plan trust may enter into
participation agreements with participants on behalf of beneficiaries pursuant
to the following terms and conditions:
(1) A participation agreement shall authorize a participant to make
contributions to an account which is established for the purpose of meeting the
qualified education expenses of a beneficiary as allowed by section 529 of the
Internal Revenue Code. A participant shall not be required to make an annual
contribution on behalf of a beneficiary, shall not be subject to minimum
contribution requirements, and shall not be required to maintain a minimum
account balance. The maximum contribution shall not exceed the amount allowed
under section 529 of the Internal Revenue Code. The State Treasurer may set a
maximum cumulative contribution, as necessary, to maintain compliance with
section 529 of the Internal Revenue Code. Participation agreements may be
amended to provide for adjusted levels of contributions based upon changed
circumstances or changes in educational plans or to ensure compliance with
section 529 of the Internal Revenue Code or any other applicable laws and
regulations;
(2) Beneficiaries designated in participation agreements shall meet the
requirements established by the trustee and section 529 of the Internal Revenue
Code;
(3) Payment of benefits provided under participation agreements shall be
made in a manner consistent with section 529 of the Internal Revenue Code;
(4) The execution of a participation agreement by the trust shall not
guarantee in any way that qualified education expenses will be equal to
projections and estimates provided by the trust or that the beneficiary named
in any participation agreement will (a) be admitted to an eligible
postsecondary educational institution or recognized postsecondary credential
program, (b) if admitted, be determined a resident for tuition purposes by the
eligible postsecondary educational institution or recognized postsecondary
credential program, (c) be allowed to continue attendance at the eligible
postsecondary educational institution or recognized postsecondary credential
program following admission, or (d) graduate from the eligible postsecondary
educational institution or recognized postsecondary credential program;
(5) Beginning January 1, 2029, the execution of a participation agreement
by the trust shall not guarantee in any way that qualified education expenses
will be equal to projections and estimates provided by the trust or that the
beneficiary named in any participation agreement will (a) be admitted to an
elementary or secondary school, (b) if admitted, be determined a resident for
tuition purposes by the elementary or secondary school, (c) be allowed to
continue attendance at the elementary or secondary school following admission,
or (d) graduate from the elementary or secondary school;
(6) A beneficiary under a participation agreement may be changed as
permitted under the rules and regulations adopted under sections 77-1415 to
77-1430 and consistent with section 529 of the Internal Revenue Code upon
written request of the participant as long as the substitute beneficiary is
eligible for participation. Participation agreements may otherwise be freely
amended throughout their term in order to enable participants to increase or
decrease the level of participation, change the designation of beneficiaries,
and carry out similar matters as authorized by rule and regulation; and
(7) Each participation agreement shall provide that the participation
agreement may be canceled upon the terms and conditions and upon payment of
applicable fees and costs set forth and contained in the rules and regulations.
Sec. 4. Section 77-1420, Revised Statutes Supplement, 2025, is amended to
read:
77-1420 (1) The State Treasurer shall deposit money received by the
Nebraska educational savings plan trust into three funds: The Education Savings
Plan Program Fund, the Education Savings Plan Expense Fund, and the Education
Savings Plan Administrative Fund. The State Treasurer shall deposit money
received by the trust into the appropriate fund. The State Treasurer and
Accounting Administrator of the Department of Administrative Services shall
determine the state fund types necessary to comply with section 529 of the
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Internal Revenue Code and state policy. The money in the funds shall be
invested by the state investment officer pursuant to policies established by
the Nebraska Investment Council. The program fund, the expense fund, and the
administrative fund shall be separately administered. The Nebraska educational
savings plan trust shall be operated with no General Fund appropriations.
(2) The Education Savings Plan Program Fund is created. All money paid in
connection with participation agreements and all investment income earned on
such money shall be deposited as received into separate accounts within the
program fund. Contributions to the trust may only be made in the form of cash.
All funds generated in connection with participation agreements shall be
deposited into the appropriate accounts within the program fund. A participant
or beneficiary shall not provide investment direction regarding program
contributions or earnings held by the trust. Until January 1, 2029, money
accrued in the program fund may be used for the benefit of a beneficiary for
payments to any eligible postsecondary educational institution or recognized
postsecondary credential program, but shall not be used to pay expenses
associated with attending kindergarten through grade twelve. Beginning January
1, 2029, money accrued in the program fund may be used for the benefit of a
beneficiary for payments to any elementary or secondary school , or eligible
postsecondary educational institution , or recognized postsecondary credential
program. Any money in the program fund available for investment shall be
invested by the state investment officer pursuant to the Nebraska Capital
Expansion Act and the Nebraska State Funds Investment Act.
(3) The Education Savings Plan Administrative Fund is created. Money from
the trust transferred from the expense fund to the administrative fund in an
amount authorized by an appropriation from the Legislature shall be utilized to
pay for the costs of administering, operating, and maintaining the trust, to
the extent permitted by section 529 of the Internal Revenue Code. The
administrative fund shall not be credited with any money other than money
transferred from the expense fund in an amount authorized by an appropriation
by the Legislature or any interest income earned on the balances held in the
administrative fund. Any money in the administrative fund available for
investment shall be invested by the state investment officer pursuant to the
Nebraska Capital Expansion Act and the Nebraska State Funds Investment Act.
(4)(a) The Education Savings Plan Expense Fund is created. The expense
fund shall be funded with fees assessed to the program fund. The State
Treasurer shall use the expense fund:
(i) To pay costs associated with the Nebraska educational savings plan
trust; and
(ii) For the purposes described in the Meadowlark Act; and
(iii) To transfer from the expense fund to the State Investment Officer's
Cash Fund an amount equal to the pro rata share of the budget appropriated to
the Nebraska Investment Council as permitted in section 72-1249.02, to cover
reasonable expenses incurred for investment management of the Nebraska
educational savings plan trust. Annually and prior to such transfer to the
State Investment Officer's Cash Fund, the State Treasurer shall report to the
budget division of the Department of Administrative Services and to the
Legislative Fiscal Analyst the amounts transferred during the previous fiscal
year. The report submitted to the Legislative Fiscal Analyst shall be submitted
electronically.
(b) Any money in the expense fund available for investment shall be
invested by the state investment officer pursuant to the Nebraska Capital
Expansion Act and the Nebraska State Funds Investment Act.
Sec. 5. Section 77-1422, Revised Statutes Supplement, 2025, is amended to
read:
77-1422 (1) A participant retains ownership of all contributions made
under a participation agreement up to the date of utilization for payment of
qualified education expenses for the beneficiary or, in the case of a qualified
education loan payment, for the beneficiary or a sibling of the beneficiary.
Notwithstanding any other provision of law, any amount credited to any account
is not susceptible to any levy, execution, judgment, or other operation of law,
garnishment, or other judicial enforcement, and the amount is not an asset or
property of either the participant or the beneficiary for the purposes of any
state insolvency or inheritance tax laws. All income derived from the
investment of the contributions made by the participant shall be considered to
be held in trust for the benefit of the beneficiary.
(2) If the program created by sections 77-1415 to 77-1430 is terminated
prior to payment of qualified education expenses, the participant is entitled
to receive the fair market value of the account established in the program.
(3) If the beneficiary graduates from an eligible postsecondary
educational institution or recognized postsecondary credential program and a
balance remains in the participant's account, any remaining funds may be used
to make qualified education loan payments for siblings of the beneficiary or
transferred as allowed by rule or regulation, subject to the provisions of
section 529 of the Internal Revenue Code, as well as any other applicable state
or federal laws or regulations.
(4)(a) The eligible postsecondary educational institution or recognized
postsecondary credential program shall obtain ownership of the payments made
for the qualified education expenses paid to the institution or program at the
time each payment is made to the institution or program.
(b) Beginning January 1, 2029, the elementary or secondary school shall
obtain ownership of the payments made for the qualified education expenses paid
to the school at the time each payment is made to the school.
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(5) Any amounts which may be paid to any person or persons pursuant to the
Nebraska educational savings plan trust but which are not listed in this
section are owned by the trust.
(6) A participant may transfer ownership rights to another eligible
participant, including a gift of the ownership rights to a minor beneficiary.
The transfer shall be made and the property distributed in accordance with the
rules and regulations or with the terms of the participation agreement.
(7) A participant shall not be entitled to utilize any interest in the
Nebraska educational savings plan trust as security for a loan.
(8) The Nebraska educational savings plan trust may accept transfers of
cash investments from a custodian under the Nebraska Uniform Transfers to
Minors Act or any other similar laws under the terms and conditions established
by the trustee.
(9) A participant may designate a successor account owner to succeed to
all of the participant's rights, title, and interest in an account, including
the right to change the account beneficiary, upon the death or legal incapacity
of the participant. If a participant dies or becomes legally incapacitated and
has failed to name a successor account owner, the account beneficiary shall
become the account owner.
(10) Upon the death of a beneficiary, the participant may change the
beneficiary on the account, transfer assets to another beneficiary who is a
member of the family of the former beneficiary, or request a nonqualified
withdrawal.
Sec. 6. Section 77-1427, Revised Statutes Supplement, 2025, is amended to
read:
77-1427 Nothing in sections 77-1415 to 77-1426 shall be deemed to prohibit
both resident and nonresident participants and designated beneficiaries from
being eligible to participate in and benefit from the Nebraska educational
savings plan trust and program. It is the intent of the Legislature that funds
and income credited to the program fund are fully portable and may be used at
any eligible postsecondary educational institution , any recognized
postsecondary credential program, and beginning January 1, 2029, at any
elementary or secondary school.
Sec. 7. Original sections 77-1416, 77-1417, 77-1419, 77-1420, 77-1422,
and 77-1427, Revised Statutes Supplement, 2025, are repealed.
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