LINCOLN- A rural senator told fellow Nebraska lawmakers Thursday that the “simplest” and most “straightforward” way to dig the state out of a $289 million budget deficit would be to pause the deep income tax cuts passed two years ago. “While tax reductions are important, we also need to be responsible to the state budget,” State Sen. Tom Brandt of Plymouth told the Legislature’s Revenue Committee. “Let’s pause and take a breath.”

Under his proposal, Legislative Bill 171, the stair-stepped reductions in individual and corporate income tax rates passed in 2023 would be paused at 4.99% in tax year 2026 and would not drop further to 3.99% as the 2023 law prescribed. That change, which Brandt maintained was “not a tax increase,” would provide an extra $497 million dollars to state coffers over the next two fiscal years, more than covering the budget gap and allowing funds to be devoted to property tax relief.

Supporters of the bill, which included the state’s major farm groups, said it would help fulfill promises by Gov. Jim Pillen and state leaders to address the state’s worst tax issue, high property taxes, while providing the revenue to head off deeper budget deficits predicted in coming years. The tax rate could be cut further, they said, when state tax revenues allow it.

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