Overview of Nebraska Taxes
The Cornhusker State has a progressive income tax system with four brackets that vary according to income level and filing status. The top rate of 6.84% for the 2018 tax year is about in line with the U.S. average for states with income taxes. No cities in Nebraska 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 Quick Facts
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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, how many allowances you claim 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. Your employer should already have applied changes to your paychecks, but it’s good to check your W-4 to make sure the information is all correct. You probably won’t need to make any changes, but it you do, you simply need to fill out a new W-4 and give it your employer.
Nebraska Median Household Income
| Year | Median Household Income |
| 2017 | $56,675 |
| 2016 | $54,384 |
| 2015 | $52,997 |
| 2014 | $52,400 |
| 2013 | $51,627 |
| 2012 | $51,381 |
| 2011 | $50,695 |
| 2010 | $49,342 |
| 2009 | $47,995 |
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 rate is 6.84%. The rates are the same for married taxpayers who file jointly and heads of households, but the income brackets are different.
There are no local income taxes in Nebraska.
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 all year. In that case, you’re probably not claiming enough allowances. Consider filing a new W-4 and claiming more allowances. This will give you more money throughout the year to invest, pay down debts or simply save in your high-interest savings account.
On the other hand, if you find that you always owe money come tax season, you may not be withholding enough from your paychecks. Consider filling out a new W-4 and claiming fewer allowances. This will make your paychecks smaller, but it will help you avoid a big tax bill. If claiming fewer allowances makes it feel like you’re losing more, just consider that you’re paying the same in income tax regardless. You’re just spreading the payments throughout the year. You can also use your W-4 to manually withhold a dollar amount from your paycheck to right-size your withholding and avoid a big bill.
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.
Nebraska Top Income Tax Rate
| Year | Top Income Tax Rate |
| 2018 | 6.84% |
| 2017 | 6.84% |
| 2016 | 6.84% |
| 2015 | 6.84% |
| 2014 | 6.84% |
| 2013 | 6.84% |
| 2012 | 6.84% |
| 2011 | 6.84% |
| 2010 | 6.84% |
| 2009 | 6.84% |
| 2008 | 6.84% |
| 2007 | 6.84% |
| 2006 | 6.84% |
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different 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.
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 rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and 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 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics
