What adjustment is Nebraska state taxes talking about on line 26 of the federal form?

Yes, this question refers to adjustments to income from your federal return and is asking whether all of it applies to your Nebraska income.

If you lived and worked in Nebraska all year and all of your income is from Nebraska, you can just enter the full $2500 as related to Nebraska.

If you were a part year resident, or worked in a different state, or had income from a different state, you need to figure out exactly what the adjustment is. 

Line 26 adjustments include:

• Educator expenses 
• Certain business expenses of reservists, performing artists, and fee-basis
• government officials
• Health savings account deduction. 
• Moving expenses for members of the Armed Forces
• Deductible part of self-employment tax.
• Self-employed SEP, SIMPLE, and qualified plans 
• Self-employed health insurance deduction 
• Penalty on early withdrawal of savings 
• Alimony paid 
• IRA deduction 
• Student loan interest deduction 
• Archer MSA deduction
• Additional miscellaneous adjustments

The second consideration is whether it is connected to Nebraska. 

For example, your adjustment is student loan interest deduction, which you paid evenly throughout the year. You lived in Nebraska from July 1 to the end of the year (50% of the year). In that case $1250 would be Nebraska related. 

If you still have questions about this, please respond back and TurboTax can help you further.