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LB 851

Change income tax provisions relating to certain income or loss received from S-corporations and limited liability companies

109th Legislature (2025-2026) Introduced by George Dungan

LB 851 modifies Nebraska income tax rules for S-corporation and LLC pass-through entity income, altering tax treatment for business owner earnings.

Referred to Revenue Committee
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WeVote Research Nonpartisan
Bill Summary · LB 851

Legislative bill overview

LB 851 modifies Nebraska's income tax treatment of pass-through entity income, specifically how S-corporation and limited liability company (LLC) earnings are taxed at the individual level. The bill adjusts provisions that determine which owners must report and pay taxes on business profits flowing through these entities to their personal tax returns.

Why is this important

Pass-through entities like S-corps and LLCs are common business structures used by small business owners and investors. Changes to how their income is taxed directly affect take-home earnings for Nebraska business owners and can influence business formation decisions and economic competitiveness within the state. This also affects state tax revenue projections.

Potential points of contention

  • Scope of tax changes: Unclear whether modifications expand or restrict tax obligations, potentially benefiting certain business structures over others or shifting tax burdens between entity types
  • Revenue impact: The bill may increase or decrease state tax collections, affecting funding for state services and potentially requiring offsetting budget adjustments
  • Fairness across business types: Changes to pass-through taxation could create disparities between different business structures (S-corps vs. LLCs vs. sole proprietorships), raising questions about horizontal equity

Compiled from official sources — confirm details with the bill’s official record.

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