Taxes in Nebraska: Features and Advantages

Main Taxes in the State of Nebraska

Income Tax:

Nebraska applies a progressive income tax scale with four brackets. In 2024, rates range from 2.46% to 6.64%. The top rate applies to income over $37,000 (single filers) or $74,000 (joint filers). Taxable income includes wages, rental income, interest, dividends, and business profits. The state offers standard and specific deductions, including credits for retirees and families with children.

Sales Tax:

The base sales tax rate in Nebraska is 5.5%, but counties and municipalities may add local surtaxes, bringing the total rate to 7.5% or higher in some areas (e.g., Omaha and Lincoln). The tax applies to most goods and certain services, including repairs, rentals, short-term housing, and digital products. Groceries, prescription drugs, and certain medical supplies are exempt.

Determining the taxable base and applicable rate can be complex and requires professional expertise and knowledge of state law. Our company provides services for obtaining a Sales Tax Certificate, as well as preparing and filing Sales and Use Tax Returns. We advise business owners on registration, calculation, and reporting.

Property Tax:

Property tax is levied at the county, city, and school district levels. Nebraska’s average effective rate is among the highest in the country, at about 1.67% of market value. This makes property tax a significant expense for homeowners and businesses. The state offers relief programs such as the Homestead Exemption for homeowners, veterans, disabled individuals, and seniors.

Business Taxes:

Nebraska levies corporate income tax on a two-tier scale: 5.58% on the first $100,000 of taxable income, and 7.25% on income above that threshold. This applies to C corporations, including foreign subsidiaries. LLCs and S corporations are not taxed at the corporate level.

All legal entities in Nebraska must file a Biennial Report (similar to an Annual Report) with the Nebraska Secretary of State. Failure to file may result in penalties or administrative dissolution. Our company provides services for preparing and timely filing Biennial Reports.

Businesses must also file reports on tangible personal property, including equipment, machinery, and furniture, which are subject to taxation.

Excise Taxes:

Nebraska levies excise taxes on alcohol, tobacco, fuel, car rentals, telecommunications, and hotel accommodations. Excises are administered separately from sales tax and require licensing and regular reporting.

Inheritance Tax:

Nebraska is one of the few U.S. states with an inheritance tax. The rate depends on the heir’s relationship to the decedent and the value of the inherited property. Direct relatives (children, spouses) are exempt or pay 1%; distant relatives up to 13%; non-relatives up to 18%.

Favorable Tax Conditions in Nebraska:

While Nebraska is not considered a low-tax state, it offers business incentive programs such as the Nebraska Advantage Act, credits for job creation, investment, and innovation. The absence of a franchise tax and reasonable corporate tax rates, combined with support programs, make the state attractive for manufacturing, agriculture, and logistics businesses.

Taxes in Nebraska Compared to Other States:

Nebraska’s tax system is balanced but requires careful planning. Sales tax is lower than in California or New York but higher than in Florida or Montana. Corporate tax is moderate but less favorable than in states without income tax (e.g., Wyoming or South Dakota). Property tax is among the highest in the U.S., which is critical for owners of commercial or investment property.

The presence of inheritance tax places Nebraska alongside states such as Pennsylvania and Iowa — requiring careful planning for business or asset transfers. The state also requires businesses to report tangible personal property, similar to practices in Pennsylvania, Maryland, and Maine.