Nebraska's 2025: Economic Growth Tempered by Labor Mandates and Tax Rollbacks

When states invest strategically in agricultural processing and value-added manufacturing, the results can be golden. Nebraska's 2025 demonstrates exactly this: three major food and agriculture processing facilities totaling over $1.2 billion in investments, plus a revitalized Business Innovation Act that delivers a nearly 16-to-1 return on investment. These wins position Nebraska as a leader in agricultural innovation and rural economic development. 

But Nebraska lawmakers have imposed new burdens: elimination of $40 million in tax incentives and credits and implementation of a $15 minimum wage. As Nebraska closes 2025, it's clear that the state has discovered a winning formula in agricultural processing and innovation investment but must address the growing labor and tax costs that could undermine competitiveness and deter future major investments.

The Wins: Nebraska's Agricultural Processing Renaissance

Nebraska has always been an agricultural powerhouse. In 2025, the state demonstrated that it can go beyond commodity production to become a hub for value-added agricultural processing: keeping wealth, jobs, and economic activity within the state rather than exporting raw materials for others to process.

Sustainable Beef's $400 Million Rancher-Owned Packing Plant

Sustainable Beef, a revolutionary rancher-owned meatpacking facility, began operations in May 2025 after receiving its first cattle shipments. The $400 million, 550,000-square-foot plant represents a groundbreaking model in which Nebraska cattle ranchers and feeders own and control their own processing capacity.

This is revolutionary. Traditional meatpacking concentrates profits in distant headquarters. Sustainable Beef's co-op structure ensures that ranchers and feeders who invested years raising quality cattle capture processing margins, keeping hundreds of millions of dollars circulating in Nebraska's rural economy rather than flowing to out-of-state shareholders.

North Platte's city leadership embraced the project, providing site access and infrastructure support that made the difference between success and failure, demonstrating how Nebraska communities partner with business rather than obstruct it. Walmart's selection of Nebraska as a lead customer and investor proves the state can execute complex, capital-intensive projects that national corporations trust with billions in supply chain commitments.

AGP's $700 Million Soybean Processing Facility

Ag Processing Inc (AGP), a farmer-owned cooperative, celebrated the grand opening of its $700 million soybean processing and degumming facility in David City in July 2025, a strategic expansion to serve the cooperative's member farmers throughout the region. AGP's facility captures these once-lost revenue margins for Nebraska farmers, transforming Nebraska from a commodity exporter to a value-added manufacturing state.

Companies don't build these types of facilities unless they're confident in decades of profitable operations. AGP's massive infrastructure investment signals that Nebraska did a good job of offering regulatory stability, workforce reliability, and agricultural productivity that justify permanent, capital-intensive manufacturing.

The facility's success makes Nebraska more attractive to other agricultural processors evaluating Midwest locations, creating momentum for additional food and agriculture manufacturing investment. The 80+ jobs create ripple effects through restaurants, retail, services, and schools, demonstrating how single major projects can transform small-town economics.

DARI Processing's $165 Million Dairy Plant: Nebraska's First New Dairy Facility in 60 Years

DARI Processing, LLC, a fourth-generation Nebraska dairy company, broke ground in June 2025 on Nebraska's first new milk processing facility in more than 60 years. 

The project details reveal strategic importance:

Keeping Milk In-State: The facility will process 30% of Nebraska's milk production that previously shipped out of state, saving hundreds of thousands of transportation miles and reducing emissions.

Moo'v Premium Product: The facility produces Moo'v ultra-filtered, lactose-free, high-protein milk sold in 180+ Hy-Vee stores and convenience stores across the Upper Midwest.

No new dairy processing plants were built in Nebraska for six decades, not because of lack of milk, but because other states offered better incentives and support. DARI Processing chose Nebraska because Governor Pillen and local stakeholders actively worked to overcome barriers and provide infrastructure support, showing how modern Nebraska government partners with business.

DARI's technology enables Nebraska dairy products to reach outside states and international export markets previously inaccessible, multiplying the economic value of Nebraska milk.

DARI's in-state processing creates economic incentives for dairy farmers to expand herds, reversing decades of decline and fueling Nebraska's key industry. Rather than competing on commodity milk, DARI focuses on premium products commanding premium prices – a value-added approach that ensures Nebraska dairy farmers and processors capture margins typically reserved for specialty food companies.

ImagiNE Nebraska: Targeted Incentives for Manufacturing Growth

Nebraska's ImagiNE Nebraska Act provides comprehensive tax incentives specifically designed for manufacturing businesses investing in job creation and capital expansion. In 2025, the program was updated with enhanced thresholds, simplified applications, and targeted bonuses for rural and urban manufacturing growth.

Lower wage thresholds (70% vs. 75%) and fewer required jobs (5 vs. 10) in rural areas reflect actual rural labor markets, making incentives usable rather than theoretical. The 4-7% investment tax credits reward companies that automate, modernize, and increase productivity, recognizing that modern manufacturing creates value through technology and capital. Blighted area incentives revitalize struggling communities by channeling capital toward areas that need it most using business and market incentives.

Business Innovation Act Restoration and Funding Increase

Governor Jim Pillen announced in December 2025 that funding for Nebraska's Business Innovation Act would be restored and increased from $12 million to $15 million annually for fiscal year 2026-2027. The BIA provides critical funding for high-potential, high-tech small businesses from seed funding through commercialization.

Most government programs struggle to demonstrate positive ROI. BIA's nearly 16-to-1 return means every million dollars invested generates $15.9 million in business revenue, creating jobs, income taxes, sales taxes, and economic activity, making BIA one of Nebraska's best public investments. 

This shows Nebraska leadership listens to business community feedback and corrects course when policies inadvertently harm entrepreneurship. BIA supports technology, biosciences, advanced manufacturing, and innovation sectors that create six-figure careers for college graduates, diversifying Nebraska's dependence on agriculture and traditional manufacturing while keeping STEM talent in-state.

The Setbacks: New Labor Costs and Tax Rollbacks Undermine Competitiveness

Even as Nebraska celebrates major agricultural processing investments totaling over $1.2 billion, lawmakers have imposed new burdens that increase operational costs and reduce the state's competitive positioning.

Elimination of $40 Million in Business Tax Incentives: LB 650

The elimination of the CHIEF Act and other tax credits through LB 650 addressed a state budget shortfall by scaling back and eliminating roughly $40 million worth of business tax incentives and exemptions.

Sunsetting and repealing incentives that firms already relied on makes Nebraska look unreliable and undermines confidence in long-term business planning. LB 650 increases overall tax complexity and costs instead of providing broad, neutral tax reform, making Nebraska less competitive with peer states. 

This is particularly troubling coming after three major agricultural processing announcements. Businesses considering similar investments will note that incentives can be eliminated mid-plan. That uncertainty will cause some to look elsewhere and creates an unstable business environment.

Initiative 433: Higher Minimum Wage With Automatic Increases

Voter-approved Initiative 433, passed in 2022 but implemented starting in 2025, raised the state minimum wage to $13.50 per hour in 2025 and rose to $15 per hour in 2026. After 2026, wages continue to rise based on cost of living.

The business impacts are significant:

Increased Labor Costs: The law increases labor costs particularly for larger companies employing many low-wage workers in retail, hospitality, and agribusiness.

Price Increases and Reduced Sales: To offset higher employment costs, companies raise prices—potentially reducing sales as consumers buy less due to higher prices.

Reduced Productivity and Skills: Higher mandated wages push companies to reduce staff, cut hours, and limit training opportunities to keep budgets in line, making companies susceptible to productivity issues and hindering workforce skills and knowledge.

Thinning Margins: Grocery and similar industries operating on thin margins struggle to absorb rapid labor-cost increases, forcing price increases.

This creates particular disadvantages for Nebraska employers. The law makes larger employers in Nebraska less competitive with employers in nearby states that have lower minimum wages, making employee retention harder. Higher minimum wages in Nebraska could influence companies to expand or invest elsewhere, particularly in states with lower minimum wages.

What Nebraska's 2025 Teaches Us

The lesson is critical: momentum requires consistency. You can attract Sustainable Beef, AGP, and DARI Processing with strategic incentives and supportive community partnerships—but if you simultaneously eliminate tax credits, impose paid leave mandates, raise minimum wages, and restrict healthcare markets, you send mixed signals to potential investors.

Companies evaluating where to build their next major facility ask a simple question: Will this state maintain a pro-business environment for the life of our investment? The combination of three historic agricultural processing announcements with the elimination of $40 million in incentives and new labor cost mandates doesn't inspire confidence.

Because at the end of the day, what's good for business is good for Nebraska—and states that combine strategic investment with cost control are the ones that will continue attracting historic agricultural processing commitments and building sustainable rural prosperity.