Skip to content
creditARMOR

State program

Nebraska Research and Development Credit

Run a mock audit for NebraskaOfficial source (opens in a new tab)
  • Partly refundable

Last reviewed November 2026

2026 change. LB 901 (2026), approved April 7, 2026, amended Neb. Rev. Stat. § 77-5804, operative July 1, 2026 (LB 901, §§ 37 and 39). It removed the language that let the R&D credit be claimed as a refundable credit on the income tax return. Since that date, the statute lets the credit be used only (a) to obtain a refund of Nebraska sales and use taxes paid, or (b) against income tax liability. The 15% and 35% rates are unchanged. LB 901 ties the change to its July 1, 2026 operative date and does not say which tax years it covers. As of November 2026 the Department of Revenue had not issued guidance on how the change applies to returns for tax years that began before July 1, 2026, and its April 2026 revision of Form 3800N Worksheet RD still describes the income tax credit as refundable.

At a glance

  • Jurisdiction: Nebraska (NE)
  • Credit name: Nebraska Advantage Research and Development Act credit (Neb. Rev. Stat. §§ 77-5801 to 77-5808)
  • Administering agency: Nebraska Department of Revenue
  • Rate(s) and base:
    • 15% of the federal research credit allowed under IRC §41, apportioned to Nebraska.
    • 35% for research performed on a Nebraska college or university campus, or in a Nebraska facility owned by one.
  • Refundable?
    • Before July 1, 2026: yes. The credit could be claimed as a refundable income tax credit or used for a refund of sales and use tax.
    • From July 1, 2026 (LB 901): the credit may be used against income tax liability or to obtain a refund of state sales and use taxes paid, limited to the sales and use tax paid. The refundable income tax option was removed. No interest is paid on refunds.
  • Transferable? No. Credits of partnerships, LLCs, S corporations and fiduciaries pass to owners and beneficiaries, who use them against their own income tax.
  • Carryforward: None. The credit is computed each year from that year's federal credit. Since LB 727 (2023), both the 15% and 35% credits are allowed for the first tax year claimed and for each tax year following, with no limit on the number of years (the former 20-year limit was removed). Neither § 77-5803 nor § 77-5804 provides a carryforward of credit that is not used in the year it is allowed.
  • Annual cap / proration: None
  • Pre-approval / application and deadline: No application or registration is required. The credit is claimed with the income tax return for the year the expenditures were made. Sales and use tax refund claims may be filed quarterly after that return is filed.
  • Forms: Form 3800N Worksheet RD and Form 3800N (Nebraska Incentives Credit Computation), filed with the corporate, partnership, S corporation or fiduciary return. For enhanced campus credits, list the campus addresses.
  • Sunset / recent changes: A business firm may not first claim the credit for a tax year beginning after December 31, 2033 (§ 77-5806). Firms already claiming may continue. LB 901 (2026), operative July 1, 2026, removed income-tax refundability. LB 727 (2023), §§ 95–96, removed the 20-year claim limit in § 77-5803 and set the December 31, 2033 first-claim cutoff in § 77-5806.

What it is

Nebraska's research credit is a percentage of the federal research credit, apportioned to Nebraska activity. There is no separate Nebraska base, and no application or annual cap. The credit is 15%, or 35% for research on a Nebraska college or university campus. It is unusual in that it can be converted into a refund of Nebraska sales and use taxes paid. Until LB 901 (2026), it could also be claimed as a refundable income tax credit.

Who can claim it

  • Any business firm that incurs research and experimental expenditures (as defined in IRC §174) in Nebraska and is allowed a federal §41 research credit.
  • E-Verify condition: the business must document that it used E-Verify to confirm the work eligibility of every employee hired in Nebraska during the tax year. This applies to hires on or after October 1, 2009. Without that documentation, the credit is not granted.
  • Pass-through owners: partners, LLC members, shareholders and beneficiaries may use distributed credits against their own Nebraska income tax.

How it is calculated

  1. Start with the federal research credit allowed under IRC §41 (Form 6765).
  2. Apportion it to Nebraska using one of two methods:
    • Nebraska research expenditures ÷ total research expenditures; or
    • the average of the Nebraska property and payroll factors.
  3. Credit = 15% × the apportioned federal credit. Use 35% for the portion of the research performed on a Nebraska college or university campus or in a facility a Nebraska college or university owns.
  4. Use the credit against Nebraska income tax, or claim a refund of Nebraska sales and use taxes paid. The refund cannot exceed the sales and use taxes paid.

How to claim it

  1. Complete Form 3800N Worksheet RD and Form 3800N, and file them with the income tax return for the year the expenditures were made.
  2. Keep E-Verify records for every Nebraska hire during the year.
  3. To use the credit for a sales and use tax refund: after filing the income tax return for the first year the credit is allowed, file refund claims quarterly. Each claim is limited to the state sales and use taxes paid.
  4. From July 1, 2026: under § 77-5804 as amended by LB 901, credit above income tax liability can no longer be claimed as a refundable income tax credit. It can be recovered only through a refund of Nebraska sales and use taxes actually paid. LB 901 does not say which tax years this covers, and as of November 2026 the Department had not issued guidance (its April 2026 Worksheet RD has not been revised to reflect LB 901), so confirm the treatment with the Department before claiming an income tax refund on any return filed on or after July 1, 2026, including a return for a tax year that began before that date.

Recent changes

  • LB 901 (2026), passed on Final Reading April 1, 2026 (36–13, with emergency clause) and approved by the Governor April 7, 2026; § 77-5804 amendment (LB 901, § 37) operative July 1, 2026 (§ 39):
    • The credit can no longer be claimed as a refundable credit on the income tax return.
    • It may still be used against income tax liability or for a refund of state sales and use taxes paid.
    • LB 901 was a revenue omnibus bill with an emergency clause. The R&D change came from LB 1109 (introduced by Sen. von Gillern at the Governor's request), which was folded into LB 901.
    • LB 901 does not state which tax years the change applies to. As of November 2026 the Department of Revenue had not issued guidance on it.
  • LB 727 (2023): amended § 77-5803 to allow the credit for the first tax year claimed and each following tax year (removing the 20-year limit), and amended § 77-5806 so that no firm may first claim the credit for a tax year beginning after December 31, 2033. The rates were unchanged.

Likely examiner questions

These questions illustrate what an examiner may ask about this credit. They are drafts for illustration and should be reviewed by a specialist before use. Most state claims also face standard questions: where the research was physically performed, how wages, supplies and contract research were apportioned between Nebraska and other locations, how Nebraska amounts reconcile to federal Form 6765, the Nebraska credit and carryforward schedule for each year claimed, and whether the claiming entity is the one subject to Nebraska tax.

  1. Provide federal Form 6765 and evidence that the federal credit was allowed for each year claimed.
  2. Show the method used to apportion the federal credit to Nebraska (expenditure ratio, or property and payroll factors) and support the inputs.
  3. For the 35% rate, provide the campus or university-owned facility addresses and evidence that the research was performed there.
  4. Provide E-Verify documentation for every employee hired in Nebraska during the tax year.
  5. For sales and use tax refunds, provide the quarterly claims and evidence of the Nebraska sales and use taxes paid that support each refund.
  6. For 2026 and later, show how the credit was used after LB 901 and that no refundable income tax claim was made where the law no longer allows it.
  7. Show the first tax year the credit was claimed, and that it began on or before December 31, 2033.

Common weak spots

  • No E-Verify records for Nebraska hires. The credit is denied.
  • Assuming the credit is still a refundable income tax credit after July 1, 2026.
  • Sales and use tax refunds claimed above the taxes actually paid.
  • 35% campus rate applied to research not physically performed on a Nebraska campus or in a university-owned facility.
  • Apportionment inputs that do not reconcile to the federal credit or to Nebraska payroll and property records.
  • Treating the credit as transferable. It is not.

Next steps

Important

This page is general information, not tax advice. Rules change; confirm current requirements with the state revenue agency or a qualified tax professional. creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS or state examination. If needed, Swanson Reed can assist you with representation before the IRS. creditARMOR and TaxTrex are products of Swanson Reed.

Run a free R&D tax credit mock audit.

You can also book a free thirty-minute scoping call with a specialist. Upload your files and see how your evidence would hold up to the questions an IRS examiner is likely to ask. A higher score means a more audit-ready claim.

creditARMOR is a free service. Passing this mock audit does not guarantee that your claim will pass an IRS examination. Book a call or email hello@creditarmor.ai for a login.

Book a scoping call (opens in a new tab)Run the eligibility checker