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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
1   A BILL FOR AN ACT relating to revenue and taxation; to amend section
277-2716, Revised Statutes Supplement, 2025; to provide an income tax
3deduction to retired firefighters and law enforcement officers for
4annual retirement benefits; and to repeal the original section.
5    Be it enacted by the people of the State of Nebraska,
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1Section 1. Section 77-2716, Revised Statutes Supplement, 2025, is
2    amended to read:
377-2716      (1)   The   following      adjustments      to   federal   adjusted     gross
4   income or, for corporations and fiduciaries, federal taxable income shall
5   be made for interest or dividends received:
6(a)(i) There shall be subtracted interest or dividends received by
7   the owner of obligations of the United States and its territories and
8   possessions or of any authority, commission, or instrumentality of the
9   United States to the extent includable in gross income for federal income
10    tax purposes but exempt from state income taxes under the laws of the
11    United States; and
12(ii) There shall be subtracted interest received by the owner of
13    obligations of the State of Nebraska or its political subdivisions or
14    authorities which are Build America Bonds to the extent includable in
15    gross income for federal income tax purposes;
16(b) There shall be subtracted that portion of the total dividends
17    and other income received from a regulated investment company which is
18    attributable      to   obligations        described    in    subdivision     (a)    of   this
19    subsection   as    reported    to    the   recipient    by    the   regulated      investment
20    company;
21(c) There shall be added interest or dividends received by the owner
22    of obligations of the District of Columbia, other states of the United
23    States, or their political subdivisions, authorities, commissions, or
24    instrumentalities to the extent excluded in the computation of gross
25    income for federal income tax purposes except that such interest or
26    dividends shall not be added if received by a corporation which is a
27    regulated investment company;
28(d) There shall be added that portion of the total dividends and
29   other   income    received    from    a    regulated    investment     company      which   is
30    attributable      to   obligations        described    in    subdivision     (c)    of   this
31   subsection and excluded for federal income tax purposes as reported to
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1    the recipient by the regulated investment company; and
2(e)(i) Any amount subtracted under this subsection shall be reduced
3    by any interest on indebtedness incurred to carry the obligations or
4    securities      described       in    this    subsection       or     the   investment        in     the
5    regulated    investment  company      and    by   any    expenses        incurred      in     the
6    production of interest or dividend income described in this subsection to
7    the extent that such expenses, including amortizable bond premiums, are
8    deductible in determining federal taxable income.
9(ii) Any amount added under this subsection shall be reduced by any
10    expenses    incurred      in    the       production     of    such      income    to   the    extent
11    disallowed in the computation of federal taxable income.
12(2) There shall be allowed a net operating loss derived from or
13    connected with Nebraska sources computed under rules and regulations
14    adopted and promulgated by the Tax Commissioner consistent, to the extent
15    possible under the Nebraska Revenue Act of 1967, with the laws of the
16    United States. For a resident individual, estate, or trust, the net
17    operating    loss      computed      on    the     federal    income      tax     return    shall     be
18    adjusted     by    the    modifications  contained      in       this     section.     For     a
19    nonresident individual, estate, or trust or for a partial-year resident
20    individual, the net operating loss computed on the federal return shall
21    be   adjusted     by   the     modifications        contained       in   this     section     and    any
22    carryovers or carrybacks shall be limited to the portion of the loss
23    derived from or connected with Nebraska sources.
24(3) There shall be subtracted from federal adjusted gross income for
25    all taxable years beginning on or after January 1, 1987, the amount of
26    any state income tax refund to the extent such refund was deducted under
27    the Internal Revenue Code, was not allowed in the computation of the tax
28    due under the Nebraska Revenue Act of 1967, and is included in federal
29    adjusted gross income.
30(4) Federal adjusted gross income, or, for a fiduciary, federal
31    taxable income shall be modified to exclude the portion of the income or
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1    loss received from a small business corporation with an election in
2    effect under subchapter S of the Internal Revenue Code or from a limited
3    liability company organized pursuant to the Nebraska Uniform Limited
4    Liability Company Act that is not derived from or connected with Nebraska
5    sources as determined in section 77-2734.01.
6(5) There shall be subtracted from federal adjusted gross income or,
7    for    corporations      and    fiduciaries,       federal        taxable   income    dividends
8    received or deemed to be received from corporations which are not subject
9    to the Internal Revenue Code.
10(6) There shall be subtracted from federal taxable income a portion
11   of the income earned by a corporation subject to the Internal Revenue
12    Code of 1986 that is actually taxed by a foreign country or one of its
13    political subdivisions at a rate in excess of the maximum federal tax
14    rate for corporations. The taxpayer may make the computation for each
15    foreign country or for groups of foreign countries. The portion of the
16    taxes that may be deducted shall be computed in the following manner:
17(a) The amount of federal taxable income from operations within a
18    foreign taxing jurisdiction shall be reduced by the amount of taxes
19    actually paid to the foreign jurisdiction that are not deductible solely
20    because the foreign tax credit was elected on the federal income tax
21    return;
22(b) The amount of after-tax income shall be divided by one minus the
23    maximum tax rate for corporations in the Internal Revenue Code; and
24(c)   The   result      of   the    calculation     in     subdivision   (b)    of   this
25    subsection shall be subtracted from the amount of federal taxable income
26    used    in   subdivision        (a)   of    this   subsection.        The   result     of   such
27    calculation,       if   greater     than   zero,   shall     be    subtracted   from    federal
28    taxable income.
29(7) Federal adjusted gross income shall be modified to exclude any
30   amount repaid by the taxpayer for which a reduction in federal tax is
31   allowed under section 1341(a)(5) of the Internal Revenue Code.
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1(8)(a)    Federal    adjusted      gross    income    or,       for    corporations  and
2    fiduciaries,     federal   taxable     income     shall    be    reduced,        to    the   extent
3   included, by income from interest, earnings, and state contributions
4   received from the Nebraska educational savings plan trust as provided in
5    sections    77-1415   to    77-1430      and    any   account        established       under      the
6   achieving   a    better    life   experience      program       as    provided        in   sections
7   77-1401 to 77-1409.
8(b)   Federal   adjusted        gross      income    or,       for     corporations  and
9   fiduciaries, federal taxable income shall be reduced by any contributions
10    as a participant in the Nebraska educational savings plan trust, any
11    contributions to an account established under the achieving a better life
12    experience program made for the benefit of a beneficiary as provided in
13    sections 77-1401 to 77-1409, or any contributions to the Give to Enable
14   Support Cash Fund as provided in the Give to Enable Support Act, to the
15   extent not deducted for federal income tax purposes, but not to exceed
16   five thousand dollars per married filing separate return or ten thousand
17   dollars for any other return. With respect to a qualified rollover within
18   the meaning of section 529 of the Internal Revenue Code from another
19   state's plan, any interest, earnings, and state contributions received
20   from the other state's educational savings plan which is qualified under
21   section 529 of the code shall qualify for the reduction provided in this
22    subdivision. For contributions by a custodian of a custodial account
23    including rollovers from another custodial account, the reduction shall
24    only apply to funds added to the custodial account after January 1, 2014.
25(c) For taxable years beginning or deemed to begin on or after
26   January 1, 2021, under the Internal Revenue Code of 1986, as amended,
27   federal adjusted gross income shall be reduced, to the extent included in
28    the   adjusted    gross    income   of    an     individual,  by    the   amount      of   any
29    contribution made by the individual's employer into an account under the
30    Nebraska educational savings plan trust owned by the individual, not to
31    exceed five thousand dollars per married filing separate return or ten
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1    thousand dollars for any other return.
2(d)    Federal    adjusted  gross       income    or,        for    corporations        and
3    fiduciaries, federal taxable income shall be increased by:
4(i) The amount resulting from the cancellation of a participation
5    agreement refunded to the taxpayer as a participant in the Nebraska
6    educational savings plan trust to the extent previously deducted under
7    subdivision (8)(b) of this section; and
8(ii)   The   amount     of   any     withdrawals  by    the    owner     of    an   account
9    established    under    the    achieving  a   better    life       experience       program    as
10    provided in sections 77-1401 to 77-1409 for nonqualified expenses to the
11    extent previously deducted under subdivision (8)(b) of this section.
12(9)(a) For income tax returns filed after September 10, 2001, for
13    taxable years beginning or deemed to begin before January 1, 2006, under
14    the Internal Revenue Code of 1986, as amended, federal adjusted gross
15    income or, for corporations and fiduciaries, federal taxable income shall
16    be increased by eighty-five percent of any amount of any federal bonus
17    depreciation       received       under     the       federal       Job     Creation       and   Worker
18    Assistance Act of 2002 or the federal Jobs and Growth Tax Act of 2003,
19    under section 168(k) or section 1400L of the Internal Revenue Code of
20    1986, as amended, for assets placed in service after September 10, 2001,
21    and before December 31, 2005.
22(b)    For   a   partnership,        limited       liability  company,        cooperative,
23    including any cooperative exempt from income taxes under section 521 of
24    the   Internal     Revenue    Code    of     1986,      as     amended,      limited       cooperative
25    association, subchapter S corporation, or joint venture, the increase
26    shall be distributed to the partners, members, shareholders, patrons, or
27    beneficiaries in the same manner as income is distributed for use against
28    their income tax liabilities.
29(c) For a corporation with a unitary business having activity both
30    inside   and   outside      the    state,    the       increase      shall       be   apportioned     to
31    Nebraska in the same manner as income is apportioned to the state by
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1   section 77-2734.05.
2(d) The amount of bonus depreciation added to federal adjusted gross
3    income or, for corporations and fiduciaries, federal taxable income by
4   this subsection shall be subtracted in a later taxable year. Twenty
5   percent of the total amount of bonus depreciation added back by this
6    subsection for tax years beginning or deemed to begin before January 1,
7   2003,    under    the    Internal    Revenue      Code   of    1986,    as    amended,     may    be
8   subtracted in the first taxable year beginning or deemed to begin on or
9    after January 1, 2005, under the Internal Revenue Code of 1986, as
10   amended, and twenty percent in each of the next four following taxable
11   years. Twenty percent of the total amount of bonus depreciation added
12   back by this subsection for tax years beginning or deemed to begin on or
13    after January 1, 2003, may be subtracted in the first taxable year
14   beginning or deemed to begin on or after January 1, 2006, under the
15   Internal Revenue Code of 1986, as amended, and twenty percent in each of
16   the next four following taxable years.
17(10) For taxable years beginning or deemed to begin on or after
18   January 1, 2003, and before January 1, 2006, under the Internal Revenue
19   Code    of   1986,      as    amended,     federal   adjusted       gross     income     or,     for
20   corporations and fiduciaries, federal taxable income shall be increased
21   by the amount of any capital investment that is expensed under section
22   179 of the Internal Revenue Code of 1986, as amended, that is in excess
23    of twenty-five thousand dollars that is allowed under the federal Jobs
24   and    Growth    Tax    Act   of   2003.   Twenty    percent       of   the   total    amount    of
25   expensing added back by this subsection for tax years beginning or deemed
26   to begin on or after January 1, 2003, may be subtracted in the first
27    taxable year beginning or deemed to begin on or after January 1, 2006,
28    under the Internal Revenue Code of 1986, as amended, and twenty percent
29    in each of the next four following tax years.
30(11)(a)    For    taxable    years    beginning        or   deemed     to   begin   before
31    January 1, 2018, under the Internal Revenue Code of 1986, as amended,
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1    federal adjusted gross income shall be reduced by contributions, up to
2    two thousand dollars per married filing jointly return or one thousand
3    dollars for any other return, and any investment earnings made as a
4    participant in the Nebraska long-term care savings plan under the Long-
5    Term Care Savings Plan Act, to the extent not deducted for federal income
6    tax purposes.
7(b) For taxable years beginning or deemed to begin before January 1,
8    2018,   under   the   Internal   Revenue    Code    of   1986,   as   amended,    federal
9    adjusted gross income shall be increased by the withdrawals made as a
10    participant in the Nebraska long-term care savings plan under the act by
11    a person who is not a qualified individual or for any reason other than
12    transfer of funds to a spouse, long-term care expenses, long-term care
13    insurance premiums, or death of the participant, including withdrawals
14    made by reason of cancellation of the participation agreement, to the
15    extent previously deducted as a contribution or as investment earnings.
16(12) There shall be added to federal adjusted gross income for
17    individuals,    estates,   and   trusts     any    amount   taken     as   a   credit   for
18    franchise tax paid by a financial institution under sections 77-3801 to
19    77-3807 as allowed by subsection (5) of section 77-2715.07.
20(13)(a) For taxable years beginning or deemed to begin on or after
21    January 1, 2015, and before January 1, 2024, under the Internal Revenue
22    Code of 1986, as amended, federal adjusted gross income shall be reduced
23    by the amount received as benefits under the federal Social Security Act
24    which are included in the federal adjusted gross income if:
25(i) For taxpayers filing a married filing joint return, federal
26    adjusted gross income is fifty-eight thousand dollars or less; or
27(ii) For taxpayers filing any other return, federal adjusted gross
28    income is forty-three thousand dollars or less.
29(b) For taxable years beginning or deemed to begin on or after
30    January 1, 2020, and before January 1, 2024, under the Internal Revenue
31    Code of 1986, as amended, the Tax Commissioner shall adjust the dollar
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1   amounts provided in subdivisions (13)(a)(i) and (ii) of this section by
2   the same percentage used to adjust individual income tax brackets under
3   subsection (3) of section 77-2715.03.
4(c) For taxable years beginning or deemed to begin on or after
5   January 1, 2021, and before January 1, 2024, under the Internal Revenue
6   Code of 1986, as amended, a taxpayer may claim the reduction to federal
7   adjusted gross income allowed under this subsection or the reduction to
8    federal   adjusted   gross   income    allowed   under   subsection   (14)     of   this
9    section, whichever provides the greater reduction.
10(14)(a) For taxable years beginning or deemed to begin on or after
11    January 1, 2021, under the Internal Revenue Code of 1986, as amended,
12   federal adjusted gross income shall be reduced by a percentage of the
13    social    security   benefits   that   are   received    and   included   in   federal
14    adjusted gross income. The pertinent percentage shall be:
15(i) Five percent for taxable years beginning or deemed to begin on
16   or after January 1, 2021, and before January 1, 2022, under the Internal
17   Revenue Code of 1986, as amended;
18(ii) Forty percent for taxable years beginning or deemed to begin on
19   or after January 1, 2022, and before January 1, 2023, under the Internal
20   Revenue Code of 1986, as amended;
21(iii) Sixty percent for taxable years beginning or deemed to begin
22    on or after January 1, 2023, and before January 1, 2024, under the
23    Internal Revenue Code of 1986, as amended; and
24(iv) One hundred percent for taxable years beginning or deemed to
25   begin on or after January 1, 2024, under the Internal Revenue Code of
26   1986, as amended.
27(b) For purposes of this subsection, social security benefits means
28    benefits received under the federal Social Security Act.
29(c) For taxable years beginning or deemed to begin on or after
30    January 1, 2021, and before January 1, 2024, under the Internal Revenue
31    Code of 1986, as amended, a taxpayer may claim the reduction to federal
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1   adjusted gross income allowed under this subsection or the reduction to
2    federal   adjusted   gross    income   allowed   under    subsection   (13)    of    this
3    section, whichever provides the greater reduction.
4(15)(a) For taxable years beginning or deemed to begin on or after
5   January 1, 2015, and before January 1, 2022, under the Internal Revenue
6    Code of 1986, as amended, an individual may make a one-time election
7    within two calendar years after the date of his or her retirement from
8    the military to exclude income received as a military retirement benefit
9    by the individual to the extent included in federal adjusted gross income
10    and as provided in this subdivision. The individual may elect to exclude
11    forty percent of his or her military retirement benefit income for seven
12    consecutive taxable years beginning with the year in which the election
13    is made or may elect to exclude fifteen percent of his or her military
14    retirement benefit income for all taxable years beginning with the year
15    in which he or she turns sixty-seven years of age.
16(b) For taxable years beginning or deemed to begin on or after
17    January 1, 2022, under the Internal Revenue Code of 1986, as amended, an
18    individual may exclude one hundred percent of the military retirement
19   benefit income received by such individual to the extent included in
20   federal adjusted gross income.
21(c) For purposes of this subsection, military retirement benefit
22    means retirement benefits that are periodic payments attributable to
23    service in the uniformed services of the United States for personal
24    services performed by an individual prior to his or her retirement. The
25    term includes retirement benefits described in this subdivision that are
26    reported to the individual on either:
27(i) An Internal Revenue Service Form 1099-R received from the United
28   States Department of Defense; or
29(ii)   An   Internal     Revenue   Service   Form    1099-R   received    from   the
30   United States Office of Personnel Management.
31(16) For taxable years beginning or deemed to begin on or after
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1   January 1, 2021, under the Internal Revenue Code of 1986, as amended,
2   federal adjusted gross income shall be reduced by the amount received as
3   a Segal AmeriCorps Education Award, to the extent such amount is included
4   in federal adjusted gross income.
5(17) For taxable years beginning or deemed to begin on or after
6   January 1, 2022, under the Internal Revenue Code of 1986, as amended,
7   federal adjusted gross income shall be reduced by the amount received by
8   or on behalf of a firefighter for cancer benefits under the Firefighter
9   Cancer Benefits Act to the extent included in federal adjusted gross
10   income.
11(18)    There   shall     be   subtracted   from   the   federal   adjusted   gross
12   income of individuals any amount received by the individual as student
13   loan repayment assistance under the Teach in Nebraska Today Act, to the
14   extent such amount is included in federal adjusted gross income.
15(19) For taxable years beginning or deemed to begin on or after
16   January 1, 2023, under the Internal Revenue Code of 1986, as amended, a
17    retired    individual   who    was   employed   full   time   as   a   firefighter   or
18   certified law enforcement officer for at least twenty years and who is at
19   least sixty years of age as of the end of the taxable year may reduce his
20   or her federal adjusted gross income by the amount of health insurance
21    premiums paid by such individual during the taxable year, to the extent
22    such premiums were not already deducted in determining the individual's
23    federal adjusted gross income.
24(20) For taxable years beginning or deemed to begin on or after
25   January 1, 2024, under the Internal Revenue Code of 1986, as amended, an
26    individual may reduce his or her federal adjusted gross income by the
27   amounts received as annuities under the Civil Service Retirement System
28   which were earned for being employed by the federal government, to the
29   extent such amounts are included in federal adjusted gross income.
30(21) For taxable years beginning or deemed to begin on or after
31   January 1, 2025, under the Internal Revenue Code of 1986, as amended, an
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1   individual who is a member of the Nebraska National Guard may exclude one
2   hundred percent of the income received from any of the following sources
3    to   the   extent   such   income   is    included     in   the   individual's   federal
4    adjusted gross income:
5(a) Serving in a 32 U.S.C. duty status such as members attending
6   drills, annual training, and military schools and members who are serving
7    in a 32 U.S.C. active guard reserve or active duty for operational
8    support duty status;
9(b) Employment as a 32 U.S.C. federal dual-status technician with
10    the Nebraska National Guard; or
11(c) Serving in a state active duty status.
12(22)(a) For taxable years beginning or deemed to begin on or after
13   January 1, 2024, under the Internal Revenue Code of 1986, as amended, an
14   individual may reduce his or her federal adjusted gross income by the
15   amount of interest and principal balance of medical debt discharged under
16   the Medical Debt Relief Act, to the extent included in such individual's
17   federal adjusted gross income.
18(b) For taxable years beginning or deemed to begin on or after
19   January 1, 2024, under the Internal Revenue Code of 1986, as amended,
20    federal    adjusted   gross   income     or,    for   corporations    and   fiduciaries,
21   federal taxable income shall be reduced by the amount of contributions
22   made to the Medical Debt Relief Fund, to the extent not deducted for
23   federal income tax purposes.
24(23) For taxable years beginning or deemed to begin on or after
25   January 1, 2025, under the Internal Revenue Code of 1986, as amended, an
26   individual who is a qualifying employee as defined in section 77-3108 may
27   reduce his or her federal adjusted gross income by the amount allowed
28   under section 77-3111.
29(24) For taxable years beginning or deemed to begin on or after
30   January 1, 2026, under the Internal Revenue Code of 1986, as amended,
31   federal    adjusted   gross   income     or,    for   corporations    and   fiduciaries,
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1   federal taxable income shall be reduced by the amounts allowed to be
2   deducted pursuant to section 77-27,242.
3(25) There shall be added to federal adjusted gross income or, for
4   corporations and fiduciaries, federal taxable income for all taxable
5    years beginning on or after January 1, 2025, the amount of any net
6    capital loss that is derived from the sale or exchange of gold or silver
7    bullion to the extent such loss is included in federal adjusted gross
8   income except that such loss shall not be added if the loss is derived
9   from the sale of bullion as a taxable distribution from any retirement
10    plan account that holds gold or silver bullion. For the purposes of this
11    subsection, bullion has the same meaning as in section 77-2704.66.
12(26) There shall be subtracted from federal adjusted gross income
13    or, for corporations and fiduciaries, federal taxable income for all
14    taxable years beginning on or after January 1, 2025, the amount of any
15    net capital gain that is derived from the sale or exchange of gold or
16    silver bullion to the extent such gain is included in federal adjusted
17    gross income except that such gain shall not be subtracted if the gain is
18    derived from the sale of bullion as a taxable distribution from any
19    retirement    plan    account   that    holds     gold    or   silver   bullion.   For    the
20    purposes of this subsection, bullion has the same meaning as in section
21    77-2704.66.
22(27) For taxable years beginning or deemed to begin on or after
23    January 1, 2027, under the Internal Revenue Code of 1986, as amended, a
24    retired    individual    who    was    employed    full    time    as   a   firefighter   or
25    certified law enforcement officer for at least twenty years and who is at
26   least sixty years of age as of the end of the taxable year may reduce his
27    or her federal adjusted gross income by the amounts received in annual
28   retirement benefits, up to a maximum of one hundred thousand dollars each
29    year, to the extent such amounts are included in federal adjusted gross
30    income.
31Sec.     2.      Original   section    77-2716,      Revised   Statutes    Supplement,
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1   2025, is repealed.
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