Nebraska State Tax Rate

Nebraska’s tax system includes a progressive individual income tax, a state and local sales tax, corporate income taxes, and relatively high property taxes compared to many other states.

The exact tax rate you pay depends on your income level, location, and type of income, so there is no single Nebraska tax rate that applies to everyone.

Nebraska Individual Income Tax

Nebraska uses a graduated (progressive) income tax, meaning higher portions of income are taxed at higher rates.

Individual Income Tax Rates

• 2.46% to 5.20
• Lower income is taxed at lower rates
• The top rate of 5.20% applies only to higher income brackets

📌 Example:
If you move into a higher tax bracket, only the income above that threshold is taxed at the higher rate—not your entire income.

Retirement and Special Income Exemptions

Nebraska offers meaningful tax relief for retirees and certain groups:

• Military retirement income: Fully exempt
• Social Security benefits: Becoming fully exempt by 2025
• Other retirement income may be partially exempt, depending on income level

These exemptions can significantly reduce state taxes for retirees.

Nebraska Sales Tax

State Sales Tax Rate

• 5.5% statewide

Local Sales Taxes

• Cities and counties may add 0.5% to 2%
• Combined rates typically range from 5.5% to 7.5%
• The average combined state and local rate is about 6.98%

📌 Example:
A purchase in one city might be taxed at 6.5%, while another location could charge 7.5%.

Nebraska Corporate Income Tax

• Flat rate: 5.2%
• Applies to C corporations doing business in Nebraska

Nebraska Property Taxes

Nebraska is known for having higher property taxes than many states.

Property Tax Details

• Effective rate: Approximately 1.43% on owner-occupied homes
• Rates vary by county, school district, and local levies

Despite higher rates, Nebraska offers property tax relief programs that may reduce the burden for qualifying homeowners.

Other Nebraska Taxes

Gasoline Tax

• Nebraska imposes a state gas tax, included in the pump price

Inheritance Tax

• Nebraska is one of the few states that still has an inheritance tax
• Rates depend on the heir’s relationship to the deceased
• Close relatives often qualify for exemptions or lower rates

Why Nebraska Taxes Vary

Nebraska does not have one single tax rate because:

• Income tax is progressive
• Sales tax depends on local jurisdiction
• Property tax rates vary by location and valuation
• Different rules apply to retirees, military members, and heirs

Why Electronic Filing Is Strongly Recommended

Because Nebraska taxes involve multiple brackets, exemptions, and local variations, electronic filing (e-filing) is the easiest and most reliable way to file.

Benefits of E-Filing

• Automatic calculation of income tax brackets
• Correct application of retirement and Social Security exemptions
• Reduced errors from manual calculations
• Faster refunds
• Immediate confirmation from the state
• Easy recordkeeping for future years

Tax software is especially helpful for retirees and households with multiple income sources.

Bottom Line

Nebraska’s tax system includes:

• Progressive income tax rates from 2.46% to 5.20%
• Sales tax of 5.5% plus local rates
• Corporate income tax of 5.2%
• Relatively high property taxes
• Special exemptions for retirement and military income

Because rates and exemptions vary, filing electronically helps ensure accuracy and makes navigating Nebraska taxes much easier.