Overview of Nebraska Taxes
Nebraska has a progressive income tax system with four brackets that vary based on income level and filing status. Income tax rate range from 2.46% to 6.64%. No cities in the Cornhusker State have local income taxes.
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Nebraska Paycheck Calculator
Nebraska Paycheck Quick Facts
- Nebraska income tax rate: 2.46% - 6.64%
- Median household income: $71,722 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your Nebraska Paycheck Works
It’s not easy to calculate what your take-home pay will be. That’s because your actual paychecks are not simply your salary divided by the number of your pay periods. There are certain deductions, like federal income and FICA taxes, taken from your paycheck no matter which state you call home. Nebraska, like most states, also deducts money to pay state income taxes.
The first deduction that all taxpayers face is FICA taxes. Your employer will withhold 1.45% in Medicare tax and 6.2% in Social Security tax. Any wages single filers, heads of household and qualifying widow(er)s make in excess of $200,000 are subject to an additional 0.9% Medicare surtax. Married couples filing jointly pay this extra tax on income above $250,000, while married couples filing separately pay it on all wages in excess of $125,000.
Your employer matches your Medicare and Social Security tax payments (minus the Medicare surtax), so the total contributions are double what you pay. Keep in mind that if you’re self-employed, you are responsible for paying the full amount yourself. Luckily there is a deduction available during tax season that you can use to decrease the bite of this self-employment tax.
Your employer will also withhold federal income taxes from your paycheck. The IRS collects this and counts it toward your annual income taxes. How much you pay in federal taxes depends on factors like whether you are single or married, how much you earn and whether you elect to have additional tax withheld from your paycheck. All this information (save for your income) is reported on your W-4 form.
The IRS made major changes to W-4 in recent years, though. The revised form excludes the use of allowances and removes the option of claiming personal or dependency exemptions. It also asks filers to enter annual dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. The form features a five-step process that allows filers to enter personal information, claim dependents and indicate any additional income.
Nebraska’s state income tax system is similar to the federal system. It’s a progressive system, which means that taxpayers who earn more pay higher taxes. There are four tax brackets in Nevada, and they vary based on income level and filing status. The lowest tax rate is 2.46%, and the highest is 6.64%, down from 6.84% in previous years. There are no local income taxes in Nebraska.
A financial advisor can help you understand how taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you are looking to purchase a property or refinance a home in the Cornhusker State, get important information in our Nebraska mortgage guide.
How You Can Affect Your Nebraska Paycheck
The best way you can change tax withholding and the size of your paychecks is to update the information in your W-4. If it seems like your paychecks are on the lower side and you always get a big refund during tax season, you could be paying too much in taxes during the year. In turn, try adjusting your withholdings so your checks are larger. This will give you more money throughout the year to invest, pay down debts or simply save in a high-interest savings account. Note that taking this option means you'll need to file a new W-4.
You can also choose to shelter more of your money from taxes in retirement accounts like a 401(k) or 403(b). These accounts take pre-tax money, which means that your contributions come out of your pay before income taxes do. This lowers your taxable income and saves you money on your taxes. Using these accounts will also, of course, help you to save for retirement.
Health savings accounts (HSAs) and flexible spending accounts (FSAs) also use pre-tax money. However, these accounts are meant to help you pay for medical expense. That means you can decrease your taxable income while simultaneously saving money for things like copays or prescriptions.
