A provision buried in LB901 will significantly reduce the profitability of gaming machines and cash devices in Nebraska restaurants starting in 2026.
Most Nebraska restaurant owners don't realize that a tax provision tucked into LB901—a bill primarily about domestic violence services and kratom regulation—will directly cut their cash device revenue in half.
Here's what's happening: LB901 doubles the quarterly tax on cash device net operating revenue from 5% to 10%, effective three calendar months after the 2026 legislative session ends. The provision appears in Section 35 on Page 22 of the bill.
If you operate or distribute mechanical amusement devices, gaming machines, or other cash devices in Nebraska, this change applies to you. The tax is levied on net operating revenue—the money left after direct operating costs.
At a 5% tax rate, a device generating $1,000 in quarterly net revenue costs you $50 in taxes. At 10%, that same device costs $100. For operators managing multiple machines, the cumulative impact is substantial.
The bill also restructures where the tax money goes. Currently, 2.5% of cash device tax revenue flows to the state General Fund. Under LB901, that share jumps to 46.75%. This means the state is capturing a much larger portion of what was previously distributed to other purposes.
For restaurant owners, the practical effect is straightforward: your after-tax margin on these machines shrinks significantly. If you've budgeted based on current tax rates, you'll need to recalculate the return on investment for keeping or expanding your cash device operations.
The change becomes operative three calendar months after the 2026 legislative session adjourns. This gives you time to plan, but not years. You should factor this into any decisions about device purchases, lease renewals, or contract negotiations happening now.
Review your current cash device revenue and margins. Calculate what a 10% tax rate means for your specific operation. If devices are a meaningful part of your revenue mix, consider whether the reduced profitability still justifies the space and licensing costs. If you're thinking about adding machines, the economics have changed.
This is also worth discussing with your accountant or business advisor, especially if you're part of a larger operation with multiple locations. The impact compounds across multiple devices.
LB901 addresses several tax and regulatory changes, but this cash device provision is one of the most direct hits to restaurant operators' bottom lines. It deserves attention in your business planning.
Source: LB901, Section 35 (Page 22) and Section 39 (Page 25), Nebraska Legislature.