On July 4, 2025, fireworks lit up the sky, hot dogs cooked on the grill, households across the country displayed their American flags and the President signed the One Big Beautiful Bill Act (OBBBA, also known as H.R. 1). Fast forward one year, and the fireworks, hot dogs and flags are bound to be back, but harmful changes implemented by this extensive legislation are still coming to bear. OBBBA made numerous cuts to food assistance, healthcare, and corporate and individual income taxes and is expected to increase the federal deficit by $3.4 trillion over the next ten years. At a time when everyday Nebraskans are worried about rising costs and balancing their own budgets, here is a recap of how the landscape has shifted after passage of OBBBA, which was supported by Nebraska’s entire federal delegation.
Taxes
Congress made numerous changes to the federal income tax code when it passed OBBBA that largely focused on tax cuts for corporations and the highest earners. According to the Institute for Taxation and Economic Policy, the richest 20% of Americans receive over 70% of the benefits from H.R. 1’s tax changes, with less than 10% going to the middle 20% and less than 1% going to the poorest 20%.
Since Nebraska uses the federal tax code as a starting point for its own tax code, the changes made in H.R. 1 are putting even more pressure on our state budget deficit. According to the Nebraska Department of Revenue, H.R. 1’s tax changes are estimated to reduce state income tax revenues by more than $400 million over the next four years. Nebraska could have protected the state budget by “decoupling” from some or all of the tax changes, as proposed in several bills during the 2026 legislative session, but these proposals stalled in the Revenue Committee.
These revenue losses come at a time when Nebraska’s budget is already under serious stress. The past three months of lower-than-expected tax receipts leave the state facing a potential shortfall of about $172 million in the current biennium. For reference, H.R. 1’s tax changes cost the state an estimated $216 million in that same period.
An additional income tax reduction was also added in H.R. 1 that would allow individuals to deduct up to $1,700 per year for donations to scholarship granting organizations beginning January 1, 2027. The provision targets donations to private schools, though some observers noted that nothing in the legislation precludes states from choosing to allow the deduction for support of public school foundations when spent on qualifying uses. There are currently no caps on the number of tax credits that could be awarded, and the Urban Institute projects that it could divert $2.7 to $6.1 billion in federal revenue annually. Governor Jim Pillen opted Nebraska into the program despite Nebraska voters’ overwhelming rejection of a similar private school measure at the ballot box in 2024.
SNAP
OBBBA also made substantive changes that will make it harder to access the Supplemental Nutrition Assistance Program (SNAP), one of the most effective anti-hunger programs in the country’s history. H.R. 1 tightened SNAP’s pre-existing work requirements by extending them to workers up to age 65 and parents of teenagers older than 14, along with limiting states’ ability to waive the work requirements for areas with high unemployment, veterans, and former foster care youth. Additionally, H.R. 1 requires that states with a SNAP error rate greater than 6% pay between 5% and 15% of SNAP benefit costs beginning in 2027, putting states on the hook for significant new expenditures. Since 100% of states’ benefit costs were paid by the federal government prior to H.R. 1, this shifts a portion of the cost of SNAP away from the federal government and onto states.
Meanwhile, SNAP participation has fallen by over 4 million people nationwide from July 2025 to March 2026, largely as a result of H.R. 1’s more restrictive work requirements. At the same time, unemployment rates nationwide have generally remained unchanged, meaning that it is very unlikely that reduced need for support is driving the decrease in SNAP participation.
In Nebraska, household SNAP participation has declined by more than 11% since H.R. 1 was passed, according to data from the Nebraska Department of Health and Human Services. This equates to about 7,800 households or 18,000 individuals who have stopped participating in SNAP. While Nebraska is one of nine states that will not have to pay an increased share of benefit costs in the coming years, even a small increase in the state’s SNAP error rate could increase the state’s expenditures in the future if the cost-sharing policy remains unchanged.
Healthcare
Finally, OBBBA made steep cuts to Medicaid by mandating that certain enrollees in the expansion population prove that they participate in work-related activities for at least 80 hours per month and that they recertify their eligibility status every six months beginning in 2027. These cuts were made in spite of the fact that 92% of adults under 65 who receive Medicaid were already working, caring for dependents, attending school, or had a disability that prevented them from working, according to KFF.
A host of data from states who have attempted to implement Medicaid work requirements in the past shows that work requirements are costly to implement and fail to achieve their stated goals. For example, Arkansas’s 2018 work requirement program did not improve employment rates, caused significant losses in healthcare coverage and was associated with increased medical debt, lower rates of medication compliance and delays in accessing care.
Governor Jim Pillen announced that Nebraska would be the first state in the country to implement work requirements beginning May 1, 2026, eight months before the federal deadline and before the Centers for Medicare and Medicaid Services had released final guidance for states. He estimated that over 30,000 Nebraskans would lose their healthcare coverage as a result of early implementation. The Nebraska Department of Health and Human Services will also not be hiring additional staff to handle the increased workload, which could cause administrative failures that lead to people improperly losing or being denied coverage.
OpenSky Policy Institute and many other partners worked diligently to communicate the high stakes of passage of this bill for Nebraskans, particularly those in working families. Our work continues as we provide research and analysis on the impacts to our bottom line – for the state and for Nebraska families.
