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LB 849

Provide a sales and use tax exemption for over-the-counter drugs

109th Legislature (2025-2026) Introduced by John Cavanaugh

Nebraska bill exempts over-the-counter medications from sales tax to reduce consumer costs and healthcare expenses.

Referred to Revenue Committee
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WeVote Research Nonpartisan
Bill Summary · LB 849

Legislative bill overview

LB 849 would exempt over-the-counter (OTC) drugs from Nebraska's sales and use tax. Currently, OTC medications are subject to the state's standard sales tax rate. This bill seeks to treat OTC drugs similarly to prescription medications, which are already exempt from sales tax in many states.

Why is this important

OTC drugs represent a significant household expense for many Nebraskans, particularly for chronic conditions, allergies, and pain management. A sales tax exemption would effectively lower medication costs for consumers and could reduce overall healthcare spending by making preventive care more affordable. This also addresses equity concerns, as lower-income households spend a larger percentage of income on OTC medications.

Potential points of contention

  • Revenue impact: Removing sales tax on OTC drugs would reduce state revenue, requiring either budget adjustments or identification of offsetting revenue sources
  • Definitional challenges: Determining which products qualify as "drugs" versus similar items (vitamins, supplements, topical products) could create administrative complexity and disputes
  • Consistency questions: Some argue exempting OTC but not other health-related purchases (medical equipment, certain wellness products) creates arbitrary distinctions in the tax code

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

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