Overview of Nebraska Taxes
Nebraska has a progressive income tax system with four brackets that vary based on income level and filing status. The top rate of 6.84% is about in line with the U.S. average for states with income taxes. No cities in the Cornhusker State have local income taxes.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Nebraska Paycheck Calculator
Nebraska Paycheck Quick Facts
- Nebraska income tax rate: 2.46% - 6.84%
- Median household income: $59,116 (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 you make in excess of $200,000 are subject to an additional 0.9% Medicare surtax. 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.
Withholding calculations for federal income tax changed for the 2018 tax year because of the new tax plan that President Trump signed into law in December 2017. If you haven't taken a look at your W-4 recently, it might be a good idea to check it to make sure the information is all correct. You likely won’t need to make any changes, but if you do, simply fill out a new copy and give it your employer. It's important to note that the IRS made major changes to the form for 2020, though.
The revised Form W-4 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. These updates primarily affect those adjusting their withholdings or changing jobs in 2020. If you began your job before 2020, there's no need to fill out a new W-4, as your old one will work fine.
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 6.84%. There are no local income taxes in Nebraska.
A financial advisor in Nebraska can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
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 small side and you always get a big refund during tax season, you could be paying too much in taxes over 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.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the U.S. Zoom between states and the national map to see data points for each region, or look specifically at one of the four ranking factors in our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology To find the most paycheck friendly places for counties across the country, we considered four factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties, we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden, or greatest take-home pay.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment index that shows the counties with the lowest rate of unemployment. For income growth, we calculated the annual growth in median income throughout a five year period for each county and then indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one-half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number, so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2018 American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics
