Nebraska Lawmakers Advance Tax Incentive Legislation Amid Union Pacific–Norfolk Southern Merger Concerns

Published: February 27, 2026

LINCOLN, Neb. — Nebraska lawmakers are advancing new economic development legislation designed in large part to ensure that Union Pacific Railroad maintains its historic corporate headquarters in Omaha as uncertainty grows surrounding the railroad’s proposed merger with Norfolk Southern Railway.

The proposal, formally introduced as Legislative Bill 1165 (LB1165) and branded the “Grow the Good Life Act,” has quickly become one of the most closely watched economic measures of the 2026 legislative session. While the bill never explicitly names Union Pacific, state officials openly acknowledge that the railroad’s future presence in Nebraska is central to the effort.

The legislation comes amid ongoing federal review of the proposed Union Pacific–Norfolk Southern merger, a transaction that—if approved—would create the nation’s first modern transcontinental freight railroad system.

Union Pacific has been headquartered in Omaha for more than 160 years and today represents one of Nebraska’s most significant private-sector employers. More than 5,500 Union Pacific employees reside in Nebraska, contributing an estimated $800 million annually in payroll while the railroad has invested over $1.5 billion in state infrastructure during the past five years.

State leaders fear that large-scale corporate consolidation following a merger could place Omaha’s headquarters status at risk—particularly given Norfolk Southern’s relatively new corporate campus in Atlanta, Georgia.

State Sen. Brad von Gillern, sponsor of LB1165, told lawmakers that recent corporate relocations elsewhere in Nebraska demonstrate the economic risks of inaction. Officials have increasingly framed the legislation as a defensive economic strategy rather than a traditional incentive package.

“This is about protecting high-paying jobs and future growth,” von Gillern said during committee testimony, emphasizing that the proposal is structured as a performance-based incentive program with clawback provisions rather than unconditional subsidies.

LB1165 modifies several existing Nebraska business incentive programs while introducing new tools aimed specifically at companies undergoing mergers or ownership transitions.

Key provisions include:

Expansion of annual wage-credit caps under the Key Employer and Jobs Retention Act
Enhanced tax credits for companies paying wages at least 150% of Nebraska’s statewide average
Increased investment incentives for large capital projects
Additional credits for employers with 3,000+ Nebraska workers that add at least 1,000 new high-salary jobs within seven years of a merger
Creation of workforce retention and recruitment grants tied to corporate transitions
A proposed $5 million state-backed site development fund
Annual transition grants of up to $300,000 per qualifying employer

Supporters argue these measures would help Nebraska compete with aggressive corporate recruitment efforts from other states should headquarters consolidation become part of merger restructuring.

Although officially neutral in wording, lawmakers and observers have widely referred to LB1165 as the “Union Pacific merger bill.” The concern stems from a familiar post-merger pattern across corporate America: consolidation of executive leadership, administrative functions, and strategic planning into a single headquarters location.

If UP ultimately becomes the dominant partner in the combined railroad—as widely expected—Nebraska leaders hope the incentive framework will make Omaha the logical long-term corporate base. Union Pacific executives appearing before lawmakers expressed support for the legislation and reiterated the company’s intention for Omaha to remain its headquarters, though final decisions could depend on merger outcomes and regulatory approval timelines.

The potential implications extend far beyond railroad employment.

Union Pacific is one of Nebraska’s only Fortune 500 companies and serves as a cornerstone of Omaha’s downtown economy. Corporate headquarters operations support:

Executive and administrative employment
Technology and logistics positions
Legal and financial services sectors
Local housing and commercial development
Secondary job creation across the region

Lawmakers warn that relocation of even a portion of headquarters operations could mirror past economic shocks caused by major corporate departures from the state. Supporters also argue that approval of the UP–NS merger could actually increase Nebraska employment if management, operational, or technology staff relocate to Omaha following consolidation.

The proposal arrives amid renewed scrutiny of Nebraska’s broader tax incentive system. State Auditor Mike Foley recently criticized aspects of earlier programs, claiming some companies continued receiving incentives even after reducing in-state investment or employment.

Business leaders and chambers of commerce counter that incentive programs have historically generated substantial returns, citing legislative studies showing tens of billions of dollars in private investment tied to earlier initiatives. Despite fiscal concerns—including a projected state budget deficit—no testimony opposing LB1165 was presented during its initial legislative hearing.

At the heart of the debate lies the still-uncertain future of the Union Pacific–Norfolk Southern merger itself. Federal regulators must evaluate competition impacts, labor considerations, and network restructuring before approval can occur—a process expected to take months or potentially years. Nevertheless, Nebraska policymakers appear determined to act early rather than react after corporate decisions are finalized. As von Gillern summarized during hearings, waiting could risk seeing future headlines announcing thousands of jobs leaving the state.

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Nebraska Lawmakers Advance Tax Incentive Legislation Amid Union Pacific–Norfolk Southern Merger Concerns

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