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Nebraska Tax Guide: Declining Progressive Rates

Learn about Nebraska's income tax brackets, sales tax obligations, and property tax relief programs for 2025.

5.84%
Top Income Tax Rate
6.94%
Combined Sales Tax
1.61%
Property Tax Rate
#16
Tax Burden Rank

Tax Overview

Nebraska uses a progressive income tax system with four brackets, and the state has been actively working to reduce rates. The top rate has been declining from 6.84% and is on a path to reach 3.99% by 2027. For 2025, the top rate is approximately 5.84%. These reductions represent one of the most aggressive income tax reform programs in the country.

Sales tax in Nebraska is 5.5% at the state level, with local option taxes that can push the combined rate above 7% in some cities. Nebraska exempts groceries from the state sales tax, though local taxes may still apply. The state has also been expanding exemptions and working to modernize its sales tax base.

Property taxes are a significant concern in Nebraska, with effective rates around 1.61%, well above the national average. This is largely due to the state's reliance on property taxes to fund schools and local government. Nebraska has introduced a refundable income tax credit for property taxes paid on real property, which provides meaningful relief. The state has also increased the homestead exemption for seniors and disabled residents.

Income Tax

Nebraska is on an aggressive rate reduction path, targeting a top rate of 3.99% by 2027. The rates shown are approximate for 2025.

Income RangeTax Rate
$0 – $3,7002.46%
$3,701 – $22,1703.51%
$22,171 – $35,7305.01%
$35,731 +5.84%

Sales Tax

State Rate5.50%
Avg. Local Rate1.44%
Combined Rate6.94%

Property Tax

Effective Rate1.61%
Median Annual Bill$3,091

Key Deductions in Nebraska

  • ✓Nebraska standard deduction matching federal amounts
  • ✓Property tax credit (refundable credit based on property taxes paid)
  • ✓Social Security income exemption
  • ✓Nebraska 529 plan deduction (up to $10,000 per return)
  • ✓Beginning farmer tax credit
  • ✓Child care tax credit for qualifying expenses

Filing Information

Filing Deadline: April 15

Tax Authority: Nebraska Department of Revenue

Phone: (402) 471-5729

Website: https://revenue.nebraska.gov

Frequently Asked Questions

Is Nebraska reducing its income tax rates?
Yes, Nebraska is on an aggressive reduction path targeting a top rate of 3.99% by 2027, down from 6.84% in 2022. This represents one of the most dramatic income tax reductions of any state in recent years.
Does Nebraska tax Social Security?
Nebraska has fully exempted Social Security benefits from state income tax. This change was part of the broader tax reform package that also included the income tax rate reductions.
Why are Nebraska property taxes so high?
Nebraska relies heavily on property taxes to fund K-12 education and local government services. The state has introduced refundable income tax credits for property taxes paid and is working on additional reform measures to reduce the property tax burden.
What is the Nebraska property tax credit?
Nebraska provides a refundable income tax credit based on property taxes paid on real property in the state. The credit is calculated as a percentage of school district property taxes paid and is claimed on your state income tax return.

Neighboring State Guides

South DakotaIowaMissouriKansasColoradoWyoming

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