Nebraska’s August tax receipts come in above projections for first time in at least five months

LINCOLN — Nebraska’s tax receipts for August broke a string of five straight months of revenues falling below economic forecasts, due to continued high sales and use tax collections.

The state Department of Revenue’s report on August’s tax receipts showed a net gain of 1.2% compared to what Nebraska’s Economic Forecasting Advisory Board had predicted in late February. That difference equates to about $7.6 million in extra revenue headed to the state’s coffers.

Legislative Fiscal Analyst Keisha Patent said the biggest factor in the latest receipts was sales and use taxes, which were 16% above forecast in August — a $35.1 million increase. Sales and use tax revenues have consistently come in above forecasts this year, while all other tax categories have often come in below forecast. August was the first month in awhile that the sales and use tax gains overcame the other categories falling short, Patent said.

August also saw a continued trend of Nebraska tax refunds steadily waning, yet still coming in above projections. The latest report shows that refunds were 2% — or $2.2 million — above forecast.

After April’s tax receipts saw abnormally high refunds impact the state’s net revenues for the month, tax refunds have continued to impact Nebraska’s receipts each month following. While refunds have remained higher than anticipated every month, the percentage it’s been above the forecast has gradually declined.

State Sen. Rob Clements of Elmwood, the term-limited chair of the Legislature’s Appropriations Committee, said he expects the impacts of tax refunds will continue to wane through the rest of this year.

Clements said he was encouraged to see August’s receipts rise above projections, particularly that sales and use tax revenues are holding strong. He said that’s a sign that Nebraska’s economy is doing well, and that the state is not in a recession.

Last month, when July’s tax receipts came in close to projections, Clements said he didn’t expect August’s receipts to be higher than the forecast. While he was happy to be wrong, Clements said he still thinks an upswing is unlikely to come this year, and he hopes to see future receipts stay flat.

“I’d be glad to see it level off,” Clements said.

Lawmakers spent the 2026 session working to fill a fluctuating shortfall that peaked at roughly $646 million. The 2027 session could be the third in a row that lawmakers have had to grapple with a projected deficit.

During the 90-day session that begins in January, state senators will form the budget for the next biennium, July 1, 2027, to June 30, 2029. They may have to fill two separate deficits. A $208 million deficit is currently projected for the end of the current budget, while an $846 million deficit is projected for the 2027-2029 budget.

Though August’s tax receipts are a good sign, Clements said he still expects some “belt-tightening” will be needed during upcoming budget discussions. Gov. Jim Pillen shared a similar sentiment in a press release about the receipts.

“Our revenue is on track. That’s great news, but we still have a lot of work ahead of us to deliver a balanced budget for hard-working Nebraskans,” Pillen wrote. “Continued spending cuts will further ensure the state is living within its means.”