Back-to-school sales tax holiday proposals considered

Nebraskans would receive a temporary tax break on back-to-school purchases under two measures heard Jan. 22 by the Revenue Committee.

LB848, introduced by Omaha Sen. John Cavanaugh, and LB865, sponsored by Sen. Jason Prokop of Lincoln, would exempt sales of clothing and shoes costing $100 or less, as well as certain school supplies, from state sales and use taxes as long as the items are for personal use.

Cavanaugh’s bill would provide an additional benefit by exempting purchases from local sales and use taxes.

Both lawmakers said the proposals would provide targeted tax relief to Nebraska families at a time when prices of everyday goods remain high.

“That relief is especially important during [the] back-to-school season, when families are often required to make large, unavoidable purchases all at once,” Prokop said.

Prices for key baby and child care items increased by approximately 24% in 2025, he added, with prices for educational books and school supplies up by more than 9%.

LB848 would exempt retail sales of school supplies of up to $50 per purchase. LB865 would exempt school supplies of up to $100 per item.

Unlike LB865, Cavanaugh’s proposal would exempt sales of personal computers of up to $1,500, software of up to $350 and graphing calculators of up to $150.

LB865 would exempt child care items like baby monitors, cribs and strollers with a sales price of $100 or less.

Neither bill would exempt sales of cell phones, sports equipment or certain accessories like watches, jewelry and handbags.

Under LB848, the annual sales tax holiday would begin on the first Friday in August and end at midnight on the following Sunday. Prokop’s holiday would start on the last Friday in July.

The state Department of Revenue estimates that each proposal would reduce state general fund revenue by $4 million per year beginning in fiscal year 2027-28.

Rich Otto testified in support of both bills on behalf of the Nebraska Retail Federation. He said the measures would encourage Nebraskans to do their back-to-school shopping at local retailers rather than those in Iowa or Missouri, which have annual sales tax holidays.

Council Bluffs retailers have reported that Iowa’s sales tax holiday, which is held on the first Friday and Saturday in August, is their busiest shopping period other than Black Friday, Otto said.

Charles Carder, owner of a Lincoln preschool and child care center, testified in support of LB865. He said Prokop’s proposal would help families on tight budgets afford to buy developmental and safety equipment for their homes as well as replace worn child care items.

“LB865 will boost the economy for our community while also providing some budgetary relief for these families,” Carder said.

No one testified in opposition to either bill and the committee took no immediate action on them.