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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 865
Introduced by Prokop, 27.
Read first time January 08, 2026
Committee: Revenue
A BILL FOR AN ACT relating to revenue and taxation; to amend sections1
77-2701 and 77-2701.04, Revised Statutes Cumulative Supplement,2
2024; to exempt sales of certain child care supplies, clothing, and3
school supplies from sales and use tax as prescribed; to harmonize4
provisions; to provide an operative date; and to repeal the original5
sections. 6
Be it enacted by the people of the State of Nebraska,7
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Section 1. Section 77-2701, Revised Statutes Cumulative Supplement,1
2024, is amended to read: 2
77-2701 Sections 77-2701 to 77-27,135.01, 77-27,222, 77-27,235,3
77-27,236, and 77-27,238 to 77-27,242 and section 3 of this act shall be4
known and may be cited as the Nebraska Revenue Act of 1967.5
Sec. 2. Section 77-2701.04, Revised Statutes Cumulative Supplement,6
2024, is amended to read: 7
77-2701.04 For purposes of sections 77-2701.04 to 77-2713 and8
77-27,239 and section 3 of this act, unless the context otherwise9
requires, the definitions found in sections 77-2701.05 to 77-2701.5610
shall be used. 11
Sec. 3. (1) Sales and use taxes shall not be imposed on the gross12
receipts from the sale, use, or other consumption in this state of the13
following items of tangible personal property if sold between 12:01 a.m.14
on the last Friday of July and 11:59 p.m. on the Sunday of the same15
weekend: 16
(a) Child care supplies with a sales price of one hundred dollars or17
less per item; 18
(b) Clothing or footwear with a sales price of one hundred dollars19
or less per item; and 20
(c) School supplies with a sales price of one hundred dollars or21
less per item. 22
(2) For purposes of this section, child care supplies means the23
following items: 24
(a) Baby monitors; 25
(b) Baby shampoo and soap; 26
(c) Baby wipes; 27
(d) Bottles, nipples, pacifiers, and sippy cups;28
(e) Cabinet, drawer, and toilet locks; 29
(f) Changing tables; 30
(g) Child potty chairs and potty seats; 31
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(h) Cribs and bassinets; 1
(i) Diaper rash cream; 2
(j) Disposable changing pads; 3
(k) Door knob covers; 4
(l) Electrical outlet covers; 5
(m) Feeding chairs and tables designed for children;6
(n) Furniture corner guards; 7
(o) High chairs; 8
(p) Infant and child bedding; 9
(q) Playpens and play yards; 10
(r) Safety gates; 11
(s) Strollers; and 12
(t) White noise machines. 13
(3) For purposes of this section, school supplies means the14
following items: 15
(a) Backpacks; 16
(b) Binder pockets; 17
(c) Binders; 18
(d) Blackboard chalk; 19
(e) Book bags; 20
(f) Calculators; 21
(g) Cellophane tape; 22
(h) Clays and glazes; 23
(i) Compasses; 24
(j) Composition books; 25
(k) Crayons; 26
(l) Dictionaries and thesauruses; 27
(m) Dividers; 28
(n) Erasers; 29
(o) Expandable, plastic, pocket, and manila folders;30
(p) Glue, paste, and paste sticks; 31
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(q) Highlighters; 1
(r) Index card boxes; 2
(s) Index cards; 3
(t) Legal pads; 4
(u) Lunch boxes; 5
(v) Markers; 6
(w) Notebooks; 7
(x) Acrylic, oil, and tempera paint; 8
(y) Paintbrushes; 9
(z) Colored, construction, copy, graph, loose-leaf ruled notebook,10
manila, and tracing paper; 11
(aa) Pencil boxes and other school supply boxes;12
(bb) Pencil sharpeners; 13
(cc) Pencils; 14
(dd) Pens; 15
(ee) Poster board; 16
(ff) Protractors; 17
(gg) Reference books; 18
(hh) Reference maps and globes; 19
(ii) Rulers; 20
(jj) Scissors; 21
(kk) Sheet music; 22
(ll) Sketch and drawing pads; 23
(mm) Textbooks; 24
(nn) Watercolors; 25
(oo) Workbooks; and 26
(pp) Writing tablets. 27
(4) The exemption provided by this section does not apply to the28
following: 29
(a) Any item for use in a trade or business; 30
(b) Cell phones; 31
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(c) Clothing accessories or equipment, including, but not limited1
to, briefcases, garment bags, handbags, jewelry, luggage, umbrellas,2
wallets, watches, and similar items carried on or about the human body,3
without regard to whether worn on the body in a manner characteristic of4
clothing; 5
(d) Computers and other types of communication, digital,6
information, or mobile technology; 7
(e) Computer software; 8
(f) Protective equipment; 9
(g) School computer supplies; 10
(h) Sport or recreational equipment, including, but not limited to,11
roller blades, skates, skis, swim fins, and similar items worn on the12
foot; or 13
(i) The lease or rental of any item. 14
(5) Each retailer making exempt sales under this section shall15
report the amount of such sales to the Tax Commissioner on the retailer's16
sales and use tax returns. 17
(6) The exemption provided in this section shall be subject to the18
following: 19
(a) A sale of eligible property under a layaway sale qualifies for20
exemption if: 21
(i) Final payment on a layaway order is made by, and the property is22
given to, the purchaser during the exemption period; or23
(ii) The purchaser selects the property and the retailer accepts the24
order for the item during the exemption period, for immediate delivery25
upon full payment, even if delivery is made after the exemption period;26
(b) A discount by the seller reduces the sales price of the eligible27
property and the discounted sales price determines whether the sales28
price is within the price threshold. A coupon that reduces the sales29
price is treated as a discount if the seller is not reimbursed for the30
coupon amount by a third party. If a discount applies to the total amount31
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paid by a purchaser, rather than to the sales price of a particular item,1
and the purchaser has purchased both eligible property and taxable2
property, the seller shall allocate the discount based on the total sales3
price of the taxable property compared to the total sales price of all4
property sold in that same transaction; 5
(c) Articles that are normally sold as a single unit shall continue6
to be sold in that manner. Such articles cannot be priced separately and7
sold as individual items in order to obtain the exemption. Such articles8
include, but are not limited to, a pair of shoes; 9
(d) Eligible property that customers purchase during the exemption10
period with use of a rain check shall qualify for the exemption,11
regardless of when the rain check was issued. Issuance of a rain check12
during the exemption period shall not qualify eligible property for the13
exemption if the property is purchased after the exemption period;14
(e) The procedure for an exchange regarding a sales tax holiday is15
as follows: 16
(i) If a customer purchases an item of eligible property during the17
exemption period, but later exchanges the item for a similar eligible18
item, even if a different size, different color, or other feature, no19
additional tax is due, even if the exchange is made after the exemption20
period; 21
(ii) If a customer purchases an item of eligible property during the22
exemption period but, after the exemption period has ended, the customer23
returns the item and receives credit on the purchase of a different item,24
the appropriate sales tax is due on the sale of the newly purchased item;25
and 26
(iii) If a customer purchases an item of eligible property before27
the exemption period, but during the exemption period the customer28
returns the item and receives credit on the purchase of a different item29
of eligible property, no sales tax is due on the sale of the new item if30
the new item is purchased during the exemption period;31
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(f)(i) Delivery charges, including shipping, handling, and service1
charges, are part of the sales price of eligible property. For the2
purpose of determining the price threshold, if all the property in a3
shipment qualifies as eligible property and the sales price for each item4
in the shipment is within the price threshold, then the seller does not5
have to allocate the delivery, handling, or service charge to determine6
if the price threshold is exceeded. The shipment shall be considered a7
sale of eligible products. If the shipment includes taxable property,8
including an eligible item with a sales price in excess of the price9
threshold, and eligible property, the seller shall allocate the delivery10
charge by using: 11
(A) A percentage based on the total sales prices of the taxable12
property compared to the total sales prices of all property in the13
shipment; or 14
(B) A percentage based on the total weight of the taxable property15
compared to the total weight of all property in the shipment.16
(ii) The seller shall tax the percentage of the delivery charge17
allocated to the taxable property, but shall not tax the percentage18
allocated to the eligible property; 19
(g) For purposes of this section, eligible property qualifies for20
exemption if: 21
(i) The item is both delivered to and paid for by the customer22
during the exemption period; or 23
(ii) The customer orders and pays for the item and the seller24
accepts the order during the exemption period for immediate shipment,25
even if delivery is made after the exemption period. The seller accepts26
an order when the seller has taken action to fill the order for immediate27
shipment. Actions to fill an order include placement of an "in date"28
stamp on a mail order or assignment of an "order number" to a telephone29
order. An order is for immediate shipment when the customer does not30
request delayed shipment. An order is for immediate shipment31
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notwithstanding that the shipment may be delayed because of a backlog of1
orders or because stock is currently unavailable to or on back order by2
the seller; 3
(h) For the sixty-day period immediately after the exemption period,4
when a customer returns an item that would qualify for the exemption, no5
credit for or refund of sales tax shall be given unless the customer6
provides a receipt or invoice that shows tax was paid or the seller has7
sufficient documentation to show that tax was paid on the specific item.8
The sixty-day period is set solely for the purpose of designating a time9
period during which the customer shall provide documentation that shows10
that sales tax was paid on returned merchandise. The sixty-day period is11
not intended to change a seller's policy on the time period during which12
the seller will accept returns; and 13
(i) The time zone of the seller's location determines the time of14
the exemption period when the purchaser is located in one time zone and15
the seller is located in another. 16
Sec. 4. This act becomes operative on January 1, 2027.17
Sec. 5. Original sections 77-2701 and 77-2701.04, Revised Statutes18
Cumulative Supplement, 2024, are repealed. 19
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