$91,300

According to analysis from the Institute on Taxation and Economic Policy (ITEP), changes to federal tax policy in the One Big Beautiful Bill Act (OBBBA) will primarily benefit the highest-earning taxpayers and provide little benefit – or even raise federal income taxes – for many moderate and low-income Nebraskans. 

ITEP estimates the bottom 60% of earners in Nebraska – whose incomes are below $91,300 per year – will, on average, either pay higher federal taxes or see no benefit from the new law in 2026. For instance, a Nebraska taxpayer who earns $16,400 a year will pay $220 more on average than they paid in 2025, an increase equivalent to 1.3% of their yearly income. Comparatively, a Nebraska taxpayer in the top 1% with an annual income of $1.8 million will receive a $35,060 cut on their federal taxes, on average, equivalent to 1.9% of their yearly income. 

Impacts of OBBBA Tax Provisions in 2026, Relative to Current (2025) Policy

(Source: Institute on Taxation and Economic Policy, 2025)

The disparate impact to federal taxes paid by Nebraskans in the OBBBA is explained by several factors. First, the table reflects a comparison of changes in the OBBBA compared to the current policy baseline of federal tax policy in 2025, much of which was temporary and scheduled to expire at the end of 2025 under the 2017 Tax Cuts and Jobs Act (TCJA). The OBBBA extended – and made permanent – many of the TCJA’s temporary provisions.

Second, the reason the majority (60%) of Nebraskans, on average, see no change or an increase in federal taxes in 2026 is largely explained by not extending the availability of enhanced premium tax credits in the OBBBA, which were designed to help moderate and low-income households afford health insurance through the Affordable Care Act (ACA) Marketplace. These credits also expire at the end of 2025 and their expiration will result in increased health insurance premiums for many Nebraskans because the federal tax changes in the OBBBA are not large enough, in many instances, to offset the loss of these credits. Additionally, the numbers presented do not include the effects of other provisions in the new law that are likely to further reduce the household resources available to working-class families, such as cuts to Medicaid and SNAP. 

Higher-income Nebraskans see a federal tax cut in 2026 on average relative to 2025 due to additional provisions included in the OBBBA, on top of the extension of many provisions from the TCJA. These include a higher deduction for state and local taxes (SALT), an increased exemption from the federal estate tax and a series of business and corporate tax changes. 

2.9%

The Bureau of Labor Statistics released their monthly report earlier this week, which indicated that the cost of food for Americans remained steady from June to July but remains elevated at 2.9% over last year, surpassing the Federal Reserve’s target inflation rate of 2%. However, this analysis indicates that food cost increases could quickly become unsustainable when and if tariffs on imported food items are implemented. 

A report from the Tax Foundation shared that in 2024, the United States imported about $221 billion in food products, 74% of which would be subject to the administration’s tariffs, which could range anywhere from 10% to triple-digit percentage increases if trade negotiations are unsuccessful. Key entities to watch for food product imports are Mexico, Canada, the European Union, Brazil and China, which, together, account for 62% of food imports. 

The administration suggests that tariffs will spur new domestic production of goods, but in the case of food products, the situation is much more complex. For instance, the United States is the largest producer, consumer and exporter of corn in the world, according to the United States Department of Agriculture. Should imported corn become more expensive, farmers in Nebraska and across the country could potentially respond by planting more acres. Unfortunately, the same is not true for crops like bananas, rice, or coffee. While they can be grown in the United States, the climate demands are typically only compatible with a few warmer states and territories, where the acres necessary to produce them are not abundantly available. A handful of raw agricultural products are protected from tariffs by the United States-Mexico-Canada Agreement, but the President stated that the Agreement was never intended to be permanent, calling it a “transitional deal” that may not be necessary anymore and signaled that the United States may take a different approach as USCMA is up for reauthorization in 2026. 

$80 million

The Nebraska State Board of Education unanimously approved directing a package of federal and private funding totaling $80 million over the next 5 years for efforts to enhance literacy for students in Nebraska’s K-12 schools. The funding included a $55 million federal grant, the largest one the state has ever received, which was augmented by a $25 million investment by The Sherwood Foundation, a private philanthropic organization. 

The federal portion of the grant will allocate 40% each to primary and secondary literacy programs, and 15% for birth-3 programs. The private philanthropic investment will help create the Nebraska Literacy Leadership Network, which will align higher education partners, classroom teachers and administrators to develop a plan for professional development and enhancing literacy instruction for current and future teachers. 

WEBINAR

With Nebraska students heading back to school, there is no better time to explore how our state funds the future.

Join OpenSky and our expert co-hosts for a webinar discussion about the current school finance challenges in Nebraska, how recent federal legislation may impact education funding, and how the newly-formed education finance commission aims to address the challenges we face in ensuring sustainable, predictable funding that allows every Nebraska student to thrive.

Date: August 25, 2025

Time: 12:00 noon

This webinar is free and open to the public and will be recorded. If you register, but are unable to attend, we will send you a copy of the recording. Register by clicking here.