On April 16, 2026, Nebraska Governor Jim Pillen signed LB 1096 into law, which addresses agricultural and critical infrastructure security from foreign adversaries, and builds on prior legislation (LB 644) enacted in 2025. Among the provisions in LB 644 was a prohibition, contained in Neb. Rev. Stat. 77-3,114, on certain entities receiving benefits from tax incentives programs (reference Tax Alert 2025-2317).

The prior version of Neb. Rev. Stat. 77-3,114 had been applied by the Nebraska Department of Revenue (Department) as covering any company that had a subsidiary based in a foreign adversarial country. Earlier this year, the Department issued additional guidance pausing enforcement of the ban.

LB 1096 amends Neb. Rev. Stat. 77-3,114 by narrowing the definition of a "foreign adversarial company" to mean a company 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, directly or indirectly, by the government of a foreign adversary or,
• Is a direct or indirect subsidiary of any company, otherwise described above.

In the context of combined reporting, LB 1096 provides that a company that is not a foreign adversarial company may use only Nebraska incentives against income taxes of the members of the same group of companies that are not foreign adversarial companies. The tax liability attributable to members of a unitary group that are foreign adversarial companies is determined using the apportionment formula used to determine the amount of tax due.

Implications

It is anticipated that the Department will issue additional guidance on these new provisions. Businesses that had been affected by these provisions should consider the impact of the amended provisions on their Nebraska incentives.