LINCOLN — Nebraska’s projected budget shortfall grew after the state Department of Revenue reported June tax collections below expectations, leaving the state about $51 million short for the month and pushing the cumulative projected deficit to roughly $223 million.
What changed for the budget
The Department of Revenue’s June report showed total tax receipts were about 7% below the Economic Forecasting Advisory Board’s projections issued in February. That shortfall for June, combined with similar misses in March, April and May, produced the current projected deficit estimate of approximately $223 million.
Officials noted the largest driver in June was individual income tax receipts, which were 10.6% below forecast — a shortfall that equates to about $30.9 million. That pattern mirrors the earlier months of the year, when income tax revenue also came in under projections.
Why this matters now
Lawmakers confronted a fluctuating shortfall during the 2026 session that at one point peaked near $646 million. If lower-than-expected tax receipts continue, the state could face persistent budget pressure into the next legislative cycle. The 2027 legislative session is slated to be a longer, 90-day session, when senators will draft the budget for the next biennium running from July 1, 2027, to June 30, 2029. A deficit is already projected for that biennium, currently estimated at about $631 million.
Officials including Gov. Jim Pillen have previously pointed to higher-than-expected tax refunds as a reason individual income tax revenues were low in earlier months, though the Department of Revenue’s June report did not confirm whether refunds were the primary factor for June’s shortfall.
- June shortfall: about $51 million (7% below forecast)
- Individual income taxes: 10.6% below forecast, ~ $30.9 million loss
- Current projected deficit: roughly $223 million (after four months of misses)
- Previous peak shortfall in 2026 session: about $646 million
- Projected next biennium shortfall: about $631 million
| Metric | Amount |
|---|---|
| June revenue shortfall | $51 million (7% below forecast) |
| Individual income tax shortfall (June) | $30.9 million (10.6% below forecast) |
| Projected 2026 deficit after receipts through June | ~$223 million |
| Peak shortfall earlier in 2026 session | ~$646 million |
| Projected next biennium deficit | ~$631 million |
What to expect next
The Economic Forecasting Advisory Board’s numbers guide legislative planning and budget decisions. With multiple months of receipts below the February forecast, lawmakers preparing for the extended 2027 session may confront repeated choices about balancing the budget: adjusting spending, using reserves, or altering tax policy. Nebraska is in the midst of a phased reduction in income tax rates; the top rate is scheduled to reach 3.99% in 2027, a fact noted by observers as they weigh long-term revenue projections.
State leaders and fiscal analysts will watch upcoming revenue reports for signs that the trend reverses. If receipts remain below forecast, the state could face continuing pressure on programs and services funded through the general fund.
Reporting from the Department of Revenue and the Economic Forecasting Advisory Board provided the figures in this report.
