Nebraska State Income Tax

The Nebraska state income tax is a simple, four-rate progressive tax with the top rate at modest levels. Its simplicity makes it relatively easy to administer. Individual taxpayers begin with their federal adjusted gross income and subtract tax credits to determine the amount of their Nebraska taxes. Credits include:

• Personal exemptions.
• The low-income elderly credit.
• Child care credits.
• Earned income tax credit.
• The beginning farmer credit.

Nebraska individual and corporate income taxes are based on the same principles as those in most other states, though there are some differences. One difference is the way pass-through entities, like sole proprietorships and partnerships, pay their income taxes. These taxes flow through to the personal returns of their owners, partners, and members, and are figured using federal tax rates in conjunction with the state’s own tax brackets.

Another difference is how the state inheritance tax is apportioned. The state splits inheritances into three categories based on a person’s relationship to the deceased: immediate and distant relatives. Inheritances from the first category are exempt from state taxes, while those from the other two are taxed at a higher rate.

Nebraska State Income Tax Changes

LB 754 allows the state to subtract from your federal taxable income the interest or dividend income not taxed in Nebraska. This is in addition to the deductions already allowed for on your federal return.

The bill also adds a new exemption for retirement benefits. This change eliminates the tax on 99% of Social Security benefits for all retirees and reduces the tax rate for the remaining 1%. It also includes a provision to exclude pension benefits from State income tax.

Finally, the bill expands a deduction for contributions to childcare programs. This tax break will reduce the cost of childcare, making Nebraska more competitive for young families.

The bill also lowers Nebraska’s top personal income tax rate to 5.84% from 6.27%. This change will increase the State’s appeal as a location for business and investment. It will also help the State compete with neighboring States that have lowered their rates in an effort to attract jobs and businesses. This legislation is part of a package of tax-relief measures that Governor Pillen pushed for to address concerns about the State’s competitiveness with other jurisdictions.

Nebraska State Income Tax Due Dates

There are a variety of Nebraska state income tax due dates, depending on the type of taxes you’re filing. For example, individual income taxes are due by April 16 (for the 2024 tax year). This includes individuals who work for themselves and those who receive unemployment insurance benefits.

Nebraska requires employers to file withholding and remittance returns on a monthly basis. The Department of Revenue encourages businesses to file electronically to reduce errors and save time. In addition, employers must remit payroll taxes to the state by January 31.