M&A Advisory in Nebraska

Nebraska's top individual income tax rate is confirmed at 5.20% for 2025, 4.55% for 2026, and a flat 3.99% for 2027 and beyond under Neb. Rev. Stat. §77-2715.03. Capital gains are taxed as ordinary income with no preferential rate. The LB 754 Pass-Through Entity Tax (PTET) election allows partnerships and S-corps to pay state tax at the entity level (up to 5.20% in 2025), generating a federal SALT-cap workaround; owners receive a credit on Nebraska Form 1040N. Social Security income is fully exempt from Nebraska income beginning 2025.

A one-time lifetime election to exclude from Nebraska taxable income all capital gain on sale of stock of a qualified Nebraska employer-corporation (filed via Form 4797N). Qualifying corporation must have ≥5 shareholders, ≥2 unrelated shareholders each owning ≥10%, and no single holder owning >90%. *Stewart v. Nebraska Dept. of Rev.* validated eve-of-closing cap table restructuring to satisfy these tests. The exclusion stacks with rolling QSBS conformity. At 5.20% (2025), excluding a $20M gain saves $910,000; at 3.99% (2027) on a $200M gain, savings reach ~$8M. LB 872 (2026) was introduced to repeal the election — verify status before relying on it.

Nebraska fully conforms to IRC §1202 on a rolling basis at both individual (Neb. Rev. Stat. §77-2714.01) and corporate (§77-2716) levels. Federal QSBS exclusions — including OBBBA tiered exclusions for stock issued after July 4, 2025 (50%/75%/100% at 3/4/5-year hold; per-issuer cap of $15M or 10x basis) — flow through automatically to Nebraska income tax. This creates truly tax-free stock-sale exits at both federal and Nebraska levels for qualifying C-corp founders. The Special Capital Gains Election can stack with QSBS for maximum exclusion on different tranches of gain.

Nebraska is one of only six U.S. states with an inheritance tax, administered and collected by each of Nebraska's 93 counties. Under LB 310 (effective January 1, 2023): Class 1 (parents, grandparents, children, grandchildren, siblings) — $100,000 exemption per beneficiary, 1% on excess; Class 2 (aunts, uncles, nieces, nephews and their descendants/spouses) — $40,000 exemption, 11%; Class 3 (all others) — $25,000 exemption, 15%. Surviving spouses, charities, and beneficiaries under age 22 are fully exempt. The tax creates liens on Nebraska real estate — title commitments may be unavailable until the tax is determined and paid. LB 1067 (2024) phaseout to 0% by 2028 stalled; LB 310 remains in force.

Nebraska's documentary stamp tax on real estate transfers is $2.32 per $1,000 of value (effective September 3, 2025). Critically, deeds executed pursuant to mergers, consolidations, or asset transfers under a plan of merger filed with the Secretary of State are exempt (Exemption #8) — making merger-structure planning valuable for deals involving Nebraska real estate. Nebraska's occasional/isolated-sale exemption (Reg-1-022) exempts transfer of all or substantially all of a trade or business to a single buyer from sales/use tax. Successor liability for unpaid taxes applies under Neb. Rev. Stat. §77-2707; buyers should obtain a DOR tax clearance letter.

The ImagiNE Nebraska Act (Neb. Rev. Stat. §§77-6801 to 77-6843) provides wage credits, investment tax credits, sales/use tax refunds, and personal property tax exemptions for qualifying businesses — credit balances are generally preserved in stock deals and transferable in asset deals with advance planning. The 2024 Grow the Good Life Act (LB 1165) provides up to $50M in retention credits for large Nebraska-headquartered employers (≥3,000 NE employees) merging with out-of-state companies that retain ≥90% of NE workforce — directly relevant to the Union Pacific–Norfolk Southern transaction.