Nebraska Income Tax Calculator

Nebraska state tax quick facts Income tax: 2.46% - 6.84% Sales tax: 5.5% - 7.5% Property tax: 1.80% average effective rate Gas tax: 28.9 cents per gallon of regular gasoline, 28.3 cents per gallon of diesel

In 2012 Nebraska cut income tax rates across the board and adjusted the tax brackets in an effort to make the system more equitable. Today, Nebraska’s income tax rates range from 2.46% to 6.84%, with a number of deductions and credits that lower the overall tax burden for many taxpayers. On the other hand, Nebraska’s average effective property tax rate of 1.80% is the highest in the region and sixth-highest in the country. Read on to learn more about these and other important Nebraska tax policies.

Nebraska Income Tax

Nebraska enacted their income tax in 1967 as a new source of revenue. The current form of the tax is similar to the federal income tax, with marginal tax rates charged based on income tax brackets. The table below shows income taxes for all filing statuses in Nebraska.

The amount and types of income that are taxed in Nebraska are similar to those taxed federally. To determine the income with which to calculate your tax bill in Nebraska, you begin with your federal adjusted gross income (AGI). This can be found on IRS Form 1040. Subtractions from federal AGI can be made in certain special circumstances, most notably if you have made contributions to a Nebraska College Savings Plan. Those contributions can be removed from AGI up to a total of $10,000 per year.

From there you subtract either the Nebraska standard deduction or your total federal itemized deductions (if you itemized deductions on your federal return). If claiming itemized deductions in Nebraska, you must subtract the amount of the deduction for state and local income taxes if you claimed it.

The standard deduction in Nebraska is $6,750 for single filers, $13,500 for joint filers and $9,900 for heads of household. You can claim a larger standard deduction if you or your spouse is over 65 years old or blind.

Once you have your Nebraska taxable income, you can calculate income taxes using the rates in the table above. In some cases, after you have determined your initial income tax bill, you may be able to subtract some tax credits to lower the amount you pay, or to increase your refund.

Nebraska Tax Credits

A tax credit reduces your total income tax bill by the amount of the credit and can result in significant tax savings. With some, called refundable credits, you will receive a payment if the credit reduces your tax liability below zero. As an example, if your liability is $100 and you are eligible for a $200 refundable credit, you will end up receiving $100 from the government. You will not get any money if a nonrefundable credit pushes your liability below zero.

There are numerous credits in Nebraska, both refundable and nonrefundable. They include the following:

• Nebraska Personal Exemption Credit – equal to $134 per exemption claimed on tax return (non-refundable)
• Nebraska Child/Dependent Care Credit – available to taxpayers with AGI less than $29,000, equal to between 100% and 30% of the federal credit (non-refundable)
• Nebraska Earned Income Credit – equal to 10% of the federal credit (refundable)
• Credit for Tax Paid to Another State – available to taxpayers who paid income taxes in another state (non-refundable)
• Credit for the Elderly or Disabled – equal to the federal credit (non-refundable)
• Beginning Farmer Credit – available to taxpayers deemed eligible by the Nebraska Department of Agriculture (refundable)

Nebraska Capital Gains Tax

Long-term and short-term capital gains are included as regular income on your Nebraska income tax return. That means they are taxed at the rates listed above, between 2.46% to 6.84%, depending on your total taxable income.

Nebraska Sales Tax

The state sales tax in Nebraska is 5.5%. That is the 21st-lowest state sales tax in the U.S. In addition to that, many cities collect their own sales taxes with rates up to 2%. The table below shows the total state and city sales tax rates for the largest cities in Nebraska.

The total state and local sales tax rates are collected upon sale of most tangible personal property and some services in Nebraska. Products such as electronics, home decorations, clothing and toys are all subject to sales tax.

Important exemptions to the Nebraska sales tax include food for human consumption (except for prepared food and food from vending machines), medicine, medical equipment and newspapers. Sales tax does not have to be paid on these items.

The services that are taxed in Nebraska include computer software, delivery charges, hotel accommodations, satellite and cable TV, telephone services, detective services, vehicle towing or painting, pest control and security services.

Nebraska Property Tax

Property in Nebraska is assessed at the county level by a county assessor. On average, across all counties, Nebraska has some of the highest property taxes in the U.S. The state’s average effective property tax rate is 1.80%, which means that the average homeowner in Nebraska pays approximately that percentage of her home’s value in taxes each year. That’s the eighth highest effective property tax rate in the U.S. If you are interested in refinancing a property in Nebraska or are looking to purchase a home there, our Nebraska mortgage rates guide has important information that will help answer all of your questions about getting a mortgage in Nebraska.

Nebraska Gas Tax

Gasoline is subject to several taxes in Nebraska. The base fuel tax on gasoline, diesel and ethanol is 28 cents per gallon. Gasoline and ethanol are subject to an additional 0.9 cent per gallon “remedial action fee,” while the fee for diesel is 0.3 cents per gallon. That means the total tax on gasoline and ethanol, before adding any federal taxes, is 28.9 cents per gallon, slightly below the national average gas tax of 34.21 cents per gallon.

Nebraska Cigarette Tax

The cigarette tax in Nebraska is just $0.64 per pack, about three cents per cigarette. That is the 10th lowest cigarette tax in the country.

Nebraska Alcohol Tax

Planning on enjoying a drink while you’re in the Cornhusker State? In that case, you might want to know about the state’s alcohol excise tax. The excise tax rates on alcohol differ between beer, wine and liquor. The tax on beer is 31 cents per gallon (17.4 cents per six pack), the tax on wine is 95 cents per gallon (3.9 cents per glass) and the tax on liquor is $3.75 per gallon (about 4.5 cents per shot).

Nebraska Inheritance Tax

The Nebraska inheritance tax varies depending on the relation of the inheritor to the decedent. The tax identifies three categories of potential inheritance recipients: immediate relatives, remote relatives and others.

Immediate relatives include siblings, parents, grandparents, children, grandchildren and other direct descendants. Inheritors in this category receive an exemption of $40,000, so no tax is applied to the first $40,000 in inheritance. Above that amount, the tax for this category is 1%.

Remote relatives include nieces, nephews, aunts, uncles and any spouses or descendants thereof. Inheritors in this category receive an exemption of $15,000, above which the tax rate is 13%.

Any person receiving an inheritance who is not in one of the first two categories falls into the third category. For these inheritors, the exemption is $10,000 and the tax rate on all inheritance above that amount is 18%.

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Nebraska is one of just two states that allows for its Electoral College votes to be split in presidential elections. Nebraska’s eastern half lies in the Central Time zone, while it’s western half is on Mountain Time. Fremont, Nebraska is one of two cities in the U.S. that produces the nation’s supply of Spam.