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LEGISLATURE OF NEBRASKA
ONE HUNDRED NINTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 930
Introduced by Cavanaugh, J., 9; Dungan, 26.
Read first time January 09, 2026
Committee: Revenue
A BILL FOR AN ACT relating to revenue and taxation; to amend section1
77-2716, Revised Statutes Supplement, 2025; to provide an income tax2
deduction to retired firefighters and law enforcement officers for3
annual retirement benefits; and to repeal the original section.4
Be it enacted by the people of the State of Nebraska,5
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Section 1. Section 77-2716, Revised Statutes Supplement, 2025, is1
amended to read: 2
77-2716 (1) The following adjustments to federal adjusted gross3
income or, for corporations and fiduciaries, federal taxable income shall4
be made for interest or dividends received: 5
(a)(i) There shall be subtracted interest or dividends received by6
the owner of obligations of the United States and its territories and7
possessions or of any authority, commission, or instrumentality of the8
United States to the extent includable in gross income for federal income9
tax purposes but exempt from state income taxes under the laws of the10
United States; and 11
(ii) There shall be subtracted interest received by the owner of12
obligations of the State of Nebraska or its political subdivisions or13
authorities which are Build America Bonds to the extent includable in14
gross income for federal income tax purposes; 15
(b) There shall be subtracted that portion of the total dividends16
and other income received from a regulated investment company which is17
attributable to obligations described in subdivision (a) of this18
subsection as reported to the recipient by the regulated investment19
company; 20
(c) There shall be added interest or dividends received by the owner21
of obligations of the District of Columbia, other states of the United22
States, or their political subdivisions, authorities, commissions, or23
instrumentalities to the extent excluded in the computation of gross24
income for federal income tax purposes except that such interest or25
dividends shall not be added if received by a corporation which is a26
regulated investment company; 27
(d) There shall be added that portion of the total dividends and28
other income received from a regulated investment company which is29
attributable to obligations described in subdivision (c) of this30
subsection and excluded for federal income tax purposes as reported to31
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the recipient by the regulated investment company; and1
(e)(i) Any amount subtracted under this subsection shall be reduced2
by any interest on indebtedness incurred to carry the obligations or3
securities described in this subsection or the investment in the4
regulated investment company and by any expenses incurred in the5
production of interest or dividend income described in this subsection to6
the extent that such expenses, including amortizable bond premiums, are7
deductible in determining federal taxable income. 8
(ii) Any amount added under this subsection shall be reduced by any9
expenses incurred in the production of such income to the extent10
disallowed in the computation of federal taxable income.11
(2) There shall be allowed a net operating loss derived from or12
connected with Nebraska sources computed under rules and regulations13
adopted and promulgated by the Tax Commissioner consistent, to the extent14
possible under the Nebraska Revenue Act of 1967, with the laws of the15
United States. For a resident individual, estate, or trust, the net16
operating loss computed on the federal income tax return shall be17
adjusted by the modifications contained in this section. For a18
nonresident individual, estate, or trust or for a partial-year resident19
individual, the net operating loss computed on the federal return shall20
be adjusted by the modifications contained in this section and any21
carryovers or carrybacks shall be limited to the portion of the loss22
derived from or connected with Nebraska sources. 23
(3) There shall be subtracted from federal adjusted gross income for24
all taxable years beginning on or after January 1, 1987, the amount of25
any state income tax refund to the extent such refund was deducted under26
the Internal Revenue Code, was not allowed in the computation of the tax27
due under the Nebraska Revenue Act of 1967, and is included in federal28
adjusted gross income. 29
(4) Federal adjusted gross income, or, for a fiduciary, federal30
taxable income shall be modified to exclude the portion of the income or31
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loss received from a small business corporation with an election in1
effect under subchapter S of the Internal Revenue Code or from a limited2
liability company organized pursuant to the Nebraska Uniform Limited3
Liability Company Act that is not derived from or connected with Nebraska4
sources as determined in section 77-2734.01. 5
(5) There shall be subtracted from federal adjusted gross income or,6
for corporations and fiduciaries, federal taxable income dividends7
received or deemed to be received from corporations which are not subject8
to the Internal Revenue Code. 9
(6) There shall be subtracted from federal taxable income a portion10
of the income earned by a corporation subject to the Internal Revenue11
Code of 1986 that is actually taxed by a foreign country or one of its12
political subdivisions at a rate in excess of the maximum federal tax13
rate for corporations. The taxpayer may make the computation for each14
foreign country or for groups of foreign countries. The portion of the15
taxes that may be deducted shall be computed in the following manner:16
(a) The amount of federal taxable income from operations within a17
foreign taxing jurisdiction shall be reduced by the amount of taxes18
actually paid to the foreign jurisdiction that are not deductible solely19
because the foreign tax credit was elected on the federal income tax20
return; 21
(b) The amount of after-tax income shall be divided by one minus the22
maximum tax rate for corporations in the Internal Revenue Code; and23
(c) The result of the calculation in subdivision (b) of this24
subsection shall be subtracted from the amount of federal taxable income25
used in subdivision (a) of this subsection. The result of such26
calculation, if greater than zero, shall be subtracted from federal27
taxable income. 28
(7) Federal adjusted gross income shall be modified to exclude any29
amount repaid by the taxpayer for which a reduction in federal tax is30
allowed under section 1341(a)(5) of the Internal Revenue Code.31
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(8)(a) Federal adjusted gross income or, for corporations and1
fiduciaries, federal taxable income shall be reduced, to the extent2
included, by income from interest, earnings, and state contributions3
received from the Nebraska educational savings plan trust as provided in4
sections 77-1415 to 77-1430 and any account established under the5
achieving a better life experience program as provided in sections6
77-1401 to 77-1409. 7
(b) Federal adjusted gross income or, for corporations and8
fiduciaries, federal taxable income shall be reduced by any contributions9
as a participant in the Nebraska educational savings plan trust, any10
contributions to an account established under the achieving a better life11
experience program made for the benefit of a beneficiary as provided in12
sections 77-1401 to 77-1409, or any contributions to the Give to Enable13
Support Cash Fund as provided in the Give to Enable Support Act, to the14
extent not deducted for federal income tax purposes, but not to exceed15
five thousand dollars per married filing separate return or ten thousand16
dollars for any other return. With respect to a qualified rollover within17
the meaning of section 529 of the Internal Revenue Code from another18
state's plan, any interest, earnings, and state contributions received19
from the other state's educational savings plan which is qualified under20
section 529 of the code shall qualify for the reduction provided in this21
subdivision. For contributions by a custodian of a custodial account22
including rollovers from another custodial account, the reduction shall23
only apply to funds added to the custodial account after January 1, 2014.24
(c) For taxable years beginning or deemed to begin on or after25
January 1, 2021, under the Internal Revenue Code of 1986, as amended,26
federal adjusted gross income shall be reduced, to the extent included in27
the adjusted gross income of an individual, by the amount of any28
contribution made by the individual's employer into an account under the29
Nebraska educational savings plan trust owned by the individual, not to30
exceed five thousand dollars per married filing separate return or ten31
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thousand dollars for any other return. 1
(d) Federal adjusted gross income or, for corporations and2
fiduciaries, federal taxable income shall be increased by:3
(i) The amount resulting from the cancellation of a participation4
agreement refunded to the taxpayer as a participant in the Nebraska5
educational savings plan trust to the extent previously deducted under6
subdivision (8)(b) of this section; and 7
(ii) The amount of any withdrawals by the owner of an account8
established under the achieving a better life experience program as9
provided in sections 77-1401 to 77-1409 for nonqualified expenses to the10
extent previously deducted under subdivision (8)(b) of this section.11
(9)(a) For income tax returns filed after September 10, 2001, for12
taxable years beginning or deemed to begin before January 1, 2006, under13
the Internal Revenue Code of 1986, as amended, federal adjusted gross14
income or, for corporations and fiduciaries, federal taxable income shall15
be increased by eighty-five percent of any amount of any federal bonus16
depreciation received under the federal Job Creation and Worker17
Assistance Act of 2002 or the federal Jobs and Growth Tax Act of 2003,18
under section 168(k) or section 1400L of the Internal Revenue Code of19
1986, as amended, for assets placed in service after September 10, 2001,20
and before December 31, 2005. 21
(b) For a partnership, limited liability company, cooperative,22
including any cooperative exempt from income taxes under section 521 of23
the Internal Revenue Code of 1986, as amended, limited cooperative24
association, subchapter S corporation, or joint venture, the increase25
shall be distributed to the partners, members, shareholders, patrons, or26
beneficiaries in the same manner as income is distributed for use against27
their income tax liabilities. 28
(c) For a corporation with a unitary business having activity both29
inside and outside the state, the increase shall be apportioned to30
Nebraska in the same manner as income is apportioned to the state by31
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section 77-2734.05. 1
(d) The amount of bonus depreciation added to federal adjusted gross2
income or, for corporations and fiduciaries, federal taxable income by3
this subsection shall be subtracted in a later taxable year. Twenty4
percent of the total amount of bonus depreciation added back by this5
subsection for tax years beginning or deemed to begin before January 1,6
2003, under the Internal Revenue Code of 1986, as amended, may be7
subtracted in the first taxable year beginning or deemed to begin on or8
after January 1, 2005, under the Internal Revenue Code of 1986, as9
amended, and twenty percent in each of the next four following taxable10
years. Twenty percent of the total amount of bonus depreciation added11
back by this subsection for tax years beginning or deemed to begin on or12
after January 1, 2003, may be subtracted in the first taxable year13
beginning or deemed to begin on or after January 1, 2006, under the14
Internal Revenue Code of 1986, as amended, and twenty percent in each of15
the next four following taxable years. 16
(10) For taxable years beginning or deemed to begin on or after17
January 1, 2003, and before January 1, 2006, under the Internal Revenue18
Code of 1986, as amended, federal adjusted gross income or, for19
corporations and fiduciaries, federal taxable income shall be increased20
by the amount of any capital investment that is expensed under section21
179 of the Internal Revenue Code of 1986, as amended, that is in excess22
of twenty-five thousand dollars that is allowed under the federal Jobs23
and Growth Tax Act of 2003. Twenty percent of the total amount of24
expensing added back by this subsection for tax years beginning or deemed25
to begin on or after January 1, 2003, may be subtracted in the first26
taxable year beginning or deemed to begin on or after January 1, 2006,27
under the Internal Revenue Code of 1986, as amended, and twenty percent28
in each of the next four following tax years. 29
(11)(a) For taxable years beginning or deemed to begin before30
January 1, 2018, under the Internal Revenue Code of 1986, as amended,31
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federal adjusted gross income shall be reduced by contributions, up to1
two thousand dollars per married filing jointly return or one thousand2
dollars for any other return, and any investment earnings made as a3
participant in the Nebraska long-term care savings plan under the Long-4
Term Care Savings Plan Act, to the extent not deducted for federal income5
tax purposes. 6
(b) For taxable years beginning or deemed to begin before January 1,7
2018, under the Internal Revenue Code of 1986, as amended, federal8
adjusted gross income shall be increased by the withdrawals made as a9
participant in the Nebraska long-term care savings plan under the act by10
a person who is not a qualified individual or for any reason other than11
transfer of funds to a spouse, long-term care expenses, long-term care12
insurance premiums, or death of the participant, including withdrawals13
made by reason of cancellation of the participation agreement, to the14
extent previously deducted as a contribution or as investment earnings.15
(12) There shall be added to federal adjusted gross income for16
individuals, estates, and trusts any amount taken as a credit for17
franchise tax paid by a financial institution under sections 77-3801 to18
77-3807 as allowed by subsection (5) of section 77-2715.07.19
(13)(a) For taxable years beginning or deemed to begin on or after20
January 1, 2015, and before January 1, 2024, under the Internal Revenue21
Code of 1986, as amended, federal adjusted gross income shall be reduced22
by the amount received as benefits under the federal Social Security Act23
which are included in the federal adjusted gross income if:24
(i) For taxpayers filing a married filing joint return, federal25
adjusted gross income is fifty-eight thousand dollars or less; or26
(ii) For taxpayers filing any other return, federal adjusted gross27
income is forty-three thousand dollars or less. 28
(b) For taxable years beginning or deemed to begin on or after29
January 1, 2020, and before January 1, 2024, under the Internal Revenue30
Code of 1986, as amended, the Tax Commissioner shall adjust the dollar31
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amounts provided in subdivisions (13)(a)(i) and (ii) of this section by1
the same percentage used to adjust individual income tax brackets under2
subsection (3) of section 77-2715.03. 3
(c) For taxable years beginning or deemed to begin on or after4
January 1, 2021, and before January 1, 2024, under the Internal Revenue5
Code of 1986, as amended, a taxpayer may claim the reduction to federal6
adjusted gross income allowed under this subsection or the reduction to7
federal adjusted gross income allowed under subsection (14) of this8
section, whichever provides the greater reduction. 9
(14)(a) For taxable years beginning or deemed to begin on or after10
January 1, 2021, under the Internal Revenue Code of 1986, as amended,11
federal adjusted gross income shall be reduced by a percentage of the12
social security benefits that are received and included in federal13
adjusted gross income. The pertinent percentage shall be:14
(i) Five percent for taxable years beginning or deemed to begin on15
or after January 1, 2021, and before January 1, 2022, under the Internal16
Revenue Code of 1986, as amended; 17
(ii) Forty percent for taxable years beginning or deemed to begin on18
or after January 1, 2022, and before January 1, 2023, under the Internal19
Revenue Code of 1986, as amended; 20
(iii) Sixty percent for taxable years beginning or deemed to begin21
on or after January 1, 2023, and before January 1, 2024, under the22
Internal Revenue Code of 1986, as amended; and 23
(iv) One hundred percent for taxable years beginning or deemed to24
begin on or after January 1, 2024, under the Internal Revenue Code of25
1986, as amended. 26
(b) For purposes of this subsection, social security benefits means27
benefits received under the federal Social Security Act.28
(c) For taxable years beginning or deemed to begin on or after29
January 1, 2021, and before January 1, 2024, under the Internal Revenue30
Code of 1986, as amended, a taxpayer may claim the reduction to federal31
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adjusted gross income allowed under this subsection or the reduction to1
federal adjusted gross income allowed under subsection (13) of this2
section, whichever provides the greater reduction. 3
(15)(a) For taxable years beginning or deemed to begin on or after4
January 1, 2015, and before January 1, 2022, under the Internal Revenue5
Code of 1986, as amended, an individual may make a one-time election6
within two calendar years after the date of his or her retirement from7
the military to exclude income received as a military retirement benefit8
by the individual to the extent included in federal adjusted gross income9
and as provided in this subdivision. The individual may elect to exclude10
forty percent of his or her military retirement benefit income for seven11
consecutive taxable years beginning with the year in which the election12
is made or may elect to exclude fifteen percent of his or her military13
retirement benefit income for all taxable years beginning with the year14
in which he or she turns sixty-seven years of age.15
(b) For taxable years beginning or deemed to begin on or after16
January 1, 2022, under the Internal Revenue Code of 1986, as amended, an17
individual may exclude one hundred percent of the military retirement18
benefit income received by such individual to the extent included in19
federal adjusted gross income. 20
(c) For purposes of this subsection, military retirement benefit21
means retirement benefits that are periodic payments attributable to22
service in the uniformed services of the United States for personal23
services performed by an individual prior to his or her retirement. The24
term includes retirement benefits described in this subdivision that are25
reported to the individual on either: 26
(i) An Internal Revenue Service Form 1099-R received from the United27
States Department of Defense; or 28
(ii) An Internal Revenue Service Form 1099-R received from the29
United States Office of Personnel Management. 30
(16) For taxable years beginning or deemed to begin on or after31
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January 1, 2021, under the Internal Revenue Code of 1986, as amended,1
federal adjusted gross income shall be reduced by the amount received as2
a Segal AmeriCorps Education Award, to the extent such amount is included3
in federal adjusted gross income. 4
(17) For taxable years beginning or deemed to begin on or after5
January 1, 2022, under the Internal Revenue Code of 1986, as amended,6
federal adjusted gross income shall be reduced by the amount received by7
or on behalf of a firefighter for cancer benefits under the Firefighter8
Cancer Benefits Act to the extent included in federal adjusted gross9
income. 10
(18) There shall be subtracted from the federal adjusted gross11
income of individuals any amount received by the individual as student12
loan repayment assistance under the Teach in Nebraska Today Act, to the13
extent such amount is included in federal adjusted gross income.14
(19) For taxable years beginning or deemed to begin on or after15
January 1, 2023, under the Internal Revenue Code of 1986, as amended, a16
retired individual who was employed full time as a firefighter or17
certified law enforcement officer for at least twenty years and who is at18
least sixty years of age as of the end of the taxable year may reduce his19
or her federal adjusted gross income by the amount of health insurance20
premiums paid by such individual during the taxable year, to the extent21
such premiums were not already deducted in determining the individual's22
federal adjusted gross income. 23
(20) For taxable years beginning or deemed to begin on or after24
January 1, 2024, under the Internal Revenue Code of 1986, as amended, an25
individual may reduce his or her federal adjusted gross income by the26
amounts received as annuities under the Civil Service Retirement System27
which were earned for being employed by the federal government, to the28
extent such amounts are included in federal adjusted gross income.29
(21) For taxable years beginning or deemed to begin on or after30
January 1, 2025, under the Internal Revenue Code of 1986, as amended, an31
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individual who is a member of the Nebraska National Guard may exclude one1
hundred percent of the income received from any of the following sources2
to the extent such income is included in the individual's federal3
adjusted gross income: 4
(a) Serving in a 32 U.S.C. duty status such as members attending5
drills, annual training, and military schools and members who are serving6
in a 32 U.S.C. active guard reserve or active duty for operational7
support duty status; 8
(b) Employment as a 32 U.S.C. federal dual-status technician with9
the Nebraska National Guard; or 10
(c) Serving in a state active duty status. 11
(22)(a) For taxable years beginning or deemed to begin on or after12
January 1, 2024, under the Internal Revenue Code of 1986, as amended, an13
individual may reduce his or her federal adjusted gross income by the14
amount of interest and principal balance of medical debt discharged under15
the Medical Debt Relief Act, to the extent included in such individual's16
federal adjusted gross income. 17
(b) For taxable years beginning or deemed to begin on or after18
January 1, 2024, under the Internal Revenue Code of 1986, as amended,19
federal adjusted gross income or, for corporations and fiduciaries,20
federal taxable income shall be reduced by the amount of contributions21
made to the Medical Debt Relief Fund, to the extent not deducted for22
federal income tax purposes. 23
(23) For taxable years beginning or deemed to begin on or after24
January 1, 2025, under the Internal Revenue Code of 1986, as amended, an25
individual who is a qualifying employee as defined in section 77-3108 may26
reduce his or her federal adjusted gross income by the amount allowed27
under section 77-3111. 28
(24) For taxable years beginning or deemed to begin on or after29
January 1, 2026, under the Internal Revenue Code of 1986, as amended,30
federal adjusted gross income or, for corporations and fiduciaries,31
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federal taxable income shall be reduced by the amounts allowed to be1
deducted pursuant to section 77-27,242. 2
(25) There shall be added to federal adjusted gross income or, for3
corporations and fiduciaries, federal taxable income for all taxable4
years beginning on or after January 1, 2025, the amount of any net5
capital loss that is derived from the sale or exchange of gold or silver6
bullion to the extent such loss is included in federal adjusted gross7
income except that such loss shall not be added if the loss is derived8
from the sale of bullion as a taxable distribution from any retirement9
plan account that holds gold or silver bullion. For the purposes of this10
subsection, bullion has the same meaning as in section 77-2704.66.11
(26) There shall be subtracted from federal adjusted gross income12
or, for corporations and fiduciaries, federal taxable income for all13
taxable years beginning on or after January 1, 2025, the amount of any14
net capital gain that is derived from the sale or exchange of gold or15
silver bullion to the extent such gain is included in federal adjusted16
gross income except that such gain shall not be subtracted if the gain is17
derived from the sale of bullion as a taxable distribution from any18
retirement plan account that holds gold or silver bullion. For the19
purposes of this subsection, bullion has the same meaning as in section20
77-2704.66. 21
(27) For taxable years beginning or deemed to begin on or after22
January 1, 2027, under the Internal Revenue Code of 1986, as amended, a23
retired individual who was employed full time as a firefighter or24
certified law enforcement officer for at least twenty years and who is at25
least sixty years of age as of the end of the taxable year may reduce his26
or her federal adjusted gross income by the amounts received in annual27
retirement benefits, up to a maximum of one hundred thousand dollars each28
year, to the extent such amounts are included in federal adjusted gross29
income. 30
Sec. 2. Original section 77-2716, Revised Statutes Supplement,31
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2025, is repealed. 1
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