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Proposal would reinstate $10,000 SALT cap in Nebraska starting 2026 to help close budget shortfall
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Summary
LB846 would decouple from a temporary federal SALT cap increase enacted in HR1 by restoring a $10,000 state SALT deduction beginning tax year 2026; supporters say it helps close a projected shortfall and targets benefits to higher‑income taxpayers, while others framed philosophical and distributional concerns.
Senator George Dungan told the committee LB846 would limit Nebraska taxpayers’ state and local tax (SALT) deduction to $10,000 annually starting in tax year 2026 through 2029 to recapture revenue lost under federal HR1 changes. He cited Department of Revenue estimates that adoption of federal changes will reduce state revenue by roughly $217 million in the current biennium and a larger shortfall overall; Dungan said his measure would recover an estimated $20–22 million in the current biennium.
Lillian Butler Hale of the OpenSky Policy Institute supported the bill, saying the federal increase to a $40,000 cap primarily benefits a small subset of higher‑income taxpayers and that reinstating a $10,000 cap is a prudent response during a state budget shortfall. Committee members expressed a range of views: some praised the measure as targeting tax relief away from high earners, while others urged caution about broader competitiveness and distributional effects.
The committee heard limited oral testimony and closed the LB846 hearing with the record of online comments noted; the measure will remain in committee.
