The Nebraska Department Revenue (Department) issued guidance on a recently enacted statutory provision, Nebraska 77-3,114, which effective October 1, 2025, prohibits certain entities from receiving benefits from Nebraska tax incentive programs.

Specifically, the new law prohibits "foreign adversarial companies" from receiving any benefit from Nebraska incentive programs. This includes entities applying for credits, investors who would claim the entity's credits on their tax returns, and all other taxpayers who would claim incentive credits from said companies.

A "foreign adversarial company" is defined as any corporation, partnership, association, organization or other combination of persons that:

• Is organized under the laws of a foreign adversary
• Has its principal place of business within a foreign adversary
• Is owned in whole or in part, operated, or controlled by the government of a foreign adversary

Or

• Is a subsidiary or parent of any company otherwise described

A "foreign adversarial country" is defined by reference to 15 CFR 791.4 and includes China (including the Hong Kong Special Administrative Region and the Macau Special Administrative Region), Cuba, Iran, North Korea, Russia and Venezuela.

The Department's guidance indicates that the new law will apply retroactively to any credits or incentives from past years that have been carried forward. The foreign adversarial company will not earn any future credits. Effective October 1, 2025, foreign adversarial company-related credits will be disallowed on all tax returns. This includes contracts under programs such as the Nebraska Advantage Act or ImagiNE Nebraska Act that do not reference this new law.

The Department will be adding a "Yes/No" question to all incentive claims and incentive filings, asking whether the company constitutes a foreign adversarial company.

Implications

This new law is unprecedented in its effect, which will be for the Department to decline to honor an incentives contract even where the business has previously fulfilled their obligations. Companies, in answering the Department's "Yes/No" questions when claiming incentives, should consider adding a statement to the response to avoid inadvertently waiving their rights.

Affected companies will want to monitor their ownership structure and consider these provisions. Those affected will also want to keep their records of performance under existing incentives agreements in the event it becomes necessary to litigate claims for any incentives earned.