Nebraska Rejects $50M Tobacco Tax Hike: Lawmakers Kill LB 1124

Nebraska state senators have blocked Legislative Bill 1124, a proposal designed to generate $50 million annually by raising cigarette taxes from $0.64 to $1.64 per pack. The bill, which also targeted vaping products, failed to overcome a filibuster in a decisive 31-10 vote on Wednesday, falling short of the 33 votes needed for cloture. The rejection leaves the state grappling with a projected $140 million budget deficit.

The Unlikely Coalition: Progressives and Fiscal Conservatives

The bill’s defeat stemmed from a rare alignment between opposing political ideologies. Progressive Senator Danielle Conrad led the filibuster, characterizing the tax as “regressive” and arguing it would balance the state budget “on the backs of low-income Nebraskans.” Conversely, fiscal conservatives like Senator Tanya Storer opposed the measure on principle, stating, “We can’t tax our way out of a deficit.”

This bipartisan resistance dismantled what Appropriations Chair Rob Clements viewed as a pragmatic solution to offset rising Medicaid costs. Despite Governor Jim Pillen’s administration lobbying for the bill—warning that its failure could necessitate “across-the-board cuts”—lawmakers remained unconvinced. Senator Machaela Cavanaugh, a past supporter of health-based tax hikes, withheld her vote, calling it “disingenuous” to use public health policy merely to plug a fiscal hole.

Read more: Tobacco Taxes 2026: Maine & Washington Hike Rates

The Failed Vape Tax Compromise

In a last-ditch effort to salvage revenue, Senator Jana Hughes proposed an amendment to strip the cigarette tax increase while retaining the hike on vape products. This compromise was projected to generate approximately $6 million. Although the amendment was technically adopted in a 33-9 vote, it was immediately nullified when the subsequent cloture motion for the main bill failed.

The collapse of LB 1124 forces the legislature to confront its remaining budget gap without this revenue stream. Senator Clements suggested that cutting Medicaid spending—which grew by $71 million this year to $1.08 billion—might now be a “last-resort option,” a move that would directly impact the healthcare services the tax was originally intended to subsidize.

Financial Metric	Proposed Figure / Status
Current Cigarette Tax	$0.64 / pack (Among lowest in US)
Proposed Tax (LB 1124)	$1.64 / pack (+$1.00 increase)
Projected Revenue	$50 Million (Failed)
Vape Tax Compromise	$6 Million (Nullified)
State Budget Deficit	~$140 Million

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.