Nebraska Allocates Nearly Half of State Budget to Property Tax Relief
Nebraska has seen a significant rise in property tax relief spending, with it now constituting nearly half of the state’s total budget. This fiscal shift highlights the state’s strong commitment to easing the financial burden on its residents.
Currently, the state allocates over $3 billion, which is about 47% of its $7 billion-plus budget, towards direct and indirect property tax relief efforts. This includes property tax credits and equalization aid to schools, as reported by the Legislative Fiscal Office.
In an intriguing financial twist, Nebraska’s biennial budget report indicates that the state distributed more funds for property tax relief this year than it gained from net sales and use tax receipts, which are among the state’s primary revenue sources. These receipts amounted to over $2.8 billion in fiscal year 2026.
The expenditures from Nebraska’s general fund, which is the main account for state spending, also surpassed $7 billion in the same fiscal year. This illustrates the scale of financial operations within the state’s budgetary framework.
Back in 2017, the cost of property tax credits and relief, both direct and indirect, was over $1.6 billion, while obligations from the general fund were more than $4.4 billion. Over the past decade, spending on property tax relief has grown by an average of 8% annually.
The inception of Nebraska’s property tax credit fund dates back to the 2007-2008 fiscal year, starting with a $105 million allocation. This appropriation has grown almost every year, reaching an anticipated $437 million in the current fiscal year.
Recent years have seen the creation of additional funds, such as the school property tax fund, the Education Future Fund, and the Community College Future Fund. These are designed to mitigate the amount these entities need to levy in property taxes, providing relief to residents in respective school districts.
For instance, the Community College Future Fund emerged when the Legislature removed the authority of community colleges to levy property taxes for self-funding, opting instead for direct state funding beginning in fiscal year 2024-2025. Collectively, these initiatives amount to over $1.4 billion in property tax credits, according to state Sen. Robert Clements.
Moreover, the Tax Equity and Educational Opportunities Support Act (TEEOSA), established in 1990, plays a pivotal role in property tax relief. It restructured public education funding to promote equality and offers substantial tax relief for residents. TEEOSA represents the largest portion of state aid to local governments, exceeding $1 billion.
