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NE — State Policy Updated January 2026

Nebraska

Sales and use tax exemption (out-of-state data only) ImagiNE Nebraska Act Out-of-state data use requirement

Overview

Nebraska’s approach to data center incentives is unusually narrow and politically contested. The state offers a sales and use tax exemption for data centers, but only if the data processed in Nebraska is used at a physical location outside the state — limiting its value for in-state cloud or AI services.[1][2][3] Data centers willing to invest $250 million or more can access the state’s general business incentive program, but broader proposals to expand data center tax relief have stalled, and a 2025 bill (LB468) advanced to Select File with language that would repeal the data center exemption altogether.[7][8]

Incentives

Sales and Use Tax Exemption for Data Centers

Nebraska exempts sales and use tax on property and services acquired for data center operations, but only if the data stored, managed, or disseminated in Nebraska is subsequently used outside the state.[1][2][3]

  • The exemption applies to property and services assembled or processed in Nebraska for use at a physical location outside Nebraska.[1]
  • The statute defines “data center” to require specific infrastructure: power distribution, cooling systems, security systems, and data communication lines.[2]
  • This restriction means a data center serving Nebraska customers or providing in-state cloud services cannot claim the exemption.

ImagiNE Nebraska Act

The ImagiNE Nebraska Act is the state’s flagship business incentive program and includes a “Mega Project” tier for large-scale investments.[4]

  • The Mega Project tier requires a minimum $250 million investment, 250 full-time employees, and wages at 150% of the state average.[4]
  • Qualifying projects receive an investment tax credit of up to 7% (higher credits available at 200% wage levels).[4]
  • Data centers are eligible if they meet the program’s investment, employment, and wage thresholds, but there are no data center-specific carve-outs or adjusted requirements.

Requirements and Conditions

Out-of-State Data Use Requirement

The sales tax exemption’s out-of-state use condition is the single largest restriction on data center tax relief in Nebraska.

  • The exemption only applies to data “subsequently used at a physical location outside Nebraska,” which excludes data centers serving Nebraska businesses, residents, or government agencies.[1][3]
  • This limitation was built into the original statute (Neb. Rev. Stat. 77-2704.62) and has not been amended.[1]

ImagiNE Nebraska Wage and Employment Floors

Data centers pursuing the ImagiNE Nebraska Act must meet the program’s general wage and employment thresholds, which may be difficult for highly automated facilities.

  • The Mega Project tier requires 250 full-time employees and a 150% wage threshold, meaning average employee wages must be at least 150% of the state average.[4]
  • Smaller investment tiers have lower requirements, but all require wage floors above the state average.

What to Watch

  • LB468 (2025) advanced to Select File and proposes repealing the data center sales tax exemption and statutory definition entirely, signaling ongoing legislative skepticism about data center tax relief.[7][8]
  • LB209 (2023) proposed broader exemptions for data center equipment, electricity, and personal property, but was indefinitely postponed in committee after concerns were raised about shifting local tax burdens.[5][6][9] The bill’s failure leaves the narrower 2012-era exemption in place.
  • Legislative debate since 2023 has centered on whether data center tax breaks shift property and sales tax burdens to other taxpayers and whether the exemptions should be expanded or repealed.[9]

Sources

[1] Nebraska Legislature, “Nebraska Revised Statute 77-2704.62. Data center; exemption,” n.d., https://nebraskalegislature.gov/laws/statutes.php?statute=77-2704.62 (accessed 2026-01-08).

[2] Nebraska Legislature, “Nebraska Revised Statute 77-2701.54. Data center, defined,” n.d., https://nebraskalegislature.gov/laws/statutes.php?statute=77-2701.54 (accessed 2026-01-08).

[3] Nebraska Department of Revenue, “Nebraska Sales Tax Exemptions” (guidance document), n.d., https://revenue.nebraska.gov/about/information-guides/nebraska-sales-tax-exemptions (accessed 2026-01-08).

[4] Nebraska Department of Revenue, “Summary of Application Levels, Minimum Requirements of Investment and Employment, and Tax Credits Available” (ImagiNE Nebraska Act, Form 8-834), n.d., https://revenue.nebraska.gov/sites/default/files/doc/incentives/ImagiNE/8-834.pdf (accessed 2026-01-08).

[5] Nebraska Legislature, “LB209 - Provide tax exemptions relating to data centers” (bill status page), Jan. 10, 2023, https://nebraskalegislature.gov/bills/view_bill.php?DocumentID=49921 (accessed 2026-01-08).

[6] Nebraska Legislature, “LB209” (Introduced bill text PDF), Jan. 10, 2023, https://nebraskalegislature.gov/FloorDocs/108/PDF/Intro/LB209.pdf (accessed 2026-01-08).

[7] Nebraska Legislature, “LB468 - Change provisions relating to inheritance taxes, change certain fee and tax provisions, and eliminate a sales tax exemption relating to data centers” (bill status page), Jan. 21, 2025, https://nebraskalegislature.gov/bills/view_bill.php?DocumentID=58985 (accessed 2026-01-08).

[8] Nebraska Legislature, “LB468” (Introduced bill text PDF), Jan. 21, 2025, https://nebraskalegislature.gov/FloorDocs/109/PDF/Intro/LB468.pdf (accessed 2026-01-08).

[9] Nebraska Legislature (Unicameral Update), “Tax incentives for data center projects considered,” March 2, 2023, https://update.legislature.ne.gov/?p=33630 (accessed 2026-01-08).