Taxes in Nebraska: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in Nebraska: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Nebraska has been actively working to reduce its tax burden in recent years, with a top income tax rate declining toward ~5.20% for 2026 (down from 6.84% in 2022) and significant property tax relief measures. Property taxes have historically been the state’s most contentious tax issue — Nebraska consistently ranks among the top 10 states for property tax burden, and ongoing reforms aim to shift more school funding to the state level to reduce reliance on local property taxes.
Nebraska Income Tax Rates (2026)
Nebraska uses a progressive income tax with four brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 2.46% | $0 – ~$3,700 |
| 3.51% | ~$3,701 – ~$22,170 |
| 5.01% | ~$22,171 – ~$35,730 |
| ~5.20% | Over ~$35,730 |
The top rate was 6.84% through 2022. Under LB 754 (2023) and subsequent legislation, the rate has been declining: 6.64% in 2023, 5.84% in 2024, with a target of ~5.20% by 2026–2027. Married filing jointly thresholds are approximately double.
Nebraska’s standard deduction is ~$8,250 for single filers and ~$16,500 for married filing jointly.
Sales Tax
| Component | Rate |
|---|---|
| State base rate | 5.50% |
| Average combined (state + local) | ~6.94% |
| Highest combined rate | ~8.00% |
Cities can add up to 2.00% in local sales taxes, and Omaha’s combined rate is approximately ~7.50%. Lincoln’s is approximately ~7.25%.
Exempt from sales tax: Most groceries (unprepared food for home consumption), prescription medications, and agricultural machinery.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.54% |
| National average | 0.99% |
| Rank | Among the top 10 highest nationally |
Nebraska’s property taxes are a persistent concern. The state has enacted multiple relief measures:
Nebraska Property Tax Credit: A refundable income tax credit based on property taxes paid on real property in Nebraska. The credit amount is set annually and has been increasing — for 2026, it is projected to offset approximately ~25%–30% of school district property taxes for most homeowners.
Homestead exemption: Qualifying homeowners aged 65+, disabled, or disabled veterans with household income below ~$47,701 (for 100% exemption) to ~$63,601 (for partial exemption) can receive exemptions ranging from 10% to 100% of the home’s taxable value.
Example: A home valued at $250,000 at a typical levy of ~$2.00 per $100 pays approximately ~$5,000 before the property tax income tax credit. After the credit, the effective burden is reduced to approximately ~$3,500–$3,750.
Other Taxes
- Estate and inheritance tax: Nebraska is one of six states with an inheritance tax. Immediate relatives (spouse, children, parents) are exempt. Other close relatives (siblings, nieces, nephews) face a 1% tax on amounts above ~$100,000. Remote relatives and unrelated persons face an 18% tax on amounts above ~$25,000.
- No estate tax.
- Capital gains: Taxed as ordinary income at rates up to ~5.20%.
- Fuel tax: ~$0.286 per gallon (variable, adjusted semi-annually).
- Cigarette tax: ~$0.64 per pack.
- Alcohol tax: ~$3.75 per gallon of spirits.
- No local income taxes.
Tax Breaks and Credits
- Social Security exemption: Nebraska is phasing in a full exemption for Social Security benefits. For 2026, Social Security is projected to be fully exempt from Nebraska income tax.
- Property tax credit: The refundable income tax credit offsets a significant portion of school district property taxes.
- Military retirement: Nebraska exempts 100% of military retirement pay from state income tax (enacted 2022).
- Nebraska EITC: ~10% of the federal Earned Income Tax Credit (refundable).
- Child care credit: Nebraska offers a nonrefundable credit for child care expenses.
- 529 plan deduction: Up to ~$10,000 per year for contributions to the Nebraska Educational Savings Trust (NEST), or ~$5,000 per year for contributions to an out-of-state 529 plan.
- Beginning farmer credit: Tax credits for landowners who rent to beginning farmers.
- Community development credit: Credits for contributions to community development organizations.
Key Takeaways
- Nebraska’s top income tax rate is declining toward ~5.20%, a significant improvement from the prior 6.84%
- Property taxes at ~1.54% remain among the highest nationally, but the refundable property tax credit provides meaningful relief
- Nebraska is one of six states with an inheritance tax, with rates of up to 18% for non-family heirs
- Social Security is being phased to full exemption, and military retirement pay is already fully exempt
- Sales tax at ~6.94% combined is near the national average, with groceries exempt
Next Steps
- Compare Nebraska to other states at State Income Tax Comparison: All 50 States Ranked
- Understand your federal obligation with the Federal Income Tax Guide 2026
- Make sure you claim everything you can — Tax Deductions You’re Probably Missing
- Ready to file? See How to File Your Taxes Step by Step
Tax information is for educational purposes only. Consult a licensed tax professional.