Nebraska Tax Calculator 2026

Nebraska Tax Overview

Nebraska Income Tax Brackets 2026

Nebraska employs a graduated income tax system with four brackets. The rates range from 2.46% on the first portion of taxable income to 5.84% on income exceeding $33,590 for single filers or $67,180 for married filing jointly. Nebraska has been engaged in significant tax reform efforts, with legislation passed in recent years to gradually reduce the top rate. The goal is to continue lowering rates while also providing property tax relief, which is the most politically significant tax issue in the state.

Nebraska uses federal adjusted gross income as the starting point for its state income tax calculation. The state conforms to the federal standard deduction, which means single filers can deduct approximately $15,000 and married couples filing jointly can deduct approximately $30,000. Nebraska also allows a personal exemption credit that provides additional tax relief for families with dependents.

Nebraska Tax Reform

Nebraska has been at the forefront of state tax reform in recent years. The state legislature passed LB 873 in 2022, which set in motion a multi-year plan to reduce income tax rates and corporate tax rates while also providing direct property tax relief through refundable income tax credits. The plan aims to reduce the top individual rate to 3.99% over time, though the pace of reductions depends on revenue growth triggers. Nebraska also eliminated its tax on Social Security benefits as part of this reform package, which was a major win for the state's retiree population.

Nebraska Sales Tax

Nebraska's state sales tax rate is 5.5%. Local jurisdictions, including cities and counties, can add up to 2% in additional sales tax, resulting in combined rates that range from 5.5% to 7.5%. The average combined state and local sales tax rate across Nebraska is approximately 6.94%.

Nebraska exempts most groceries from state sales tax, which provides meaningful relief for families. However, prepared food, restaurant meals, and soft drinks are taxable. The state also exempts prescription medications and certain medical devices. Nebraska taxes most tangible personal property, including clothing, electronics, and household goods.

Notable Local Rates

• Omaha — 7.0% combined (1.5% city tax)
• Lincoln — 7.25% combined (1.75% city tax)
• Grand Island — 7.0% combined
• Bellevue — 7.0% combined
• Kearney — 7.5% combined (2.0% city tax)

Nebraska Property Tax

Nebraska's effective property tax rate of approximately 1.61% is one of the highest in the nation, ranking in the top 10 among all states. Property taxes are the single largest source of revenue for local governments in Nebraska, funding schools, counties, cities, and various special districts. This heavy reliance on property taxes has been a persistent political issue in the state for decades.

Agricultural landowners are particularly affected by high property taxes, as farmland values in Nebraska have appreciated significantly over the past two decades. The state has implemented several property tax relief measures, including the Property Tax Credit Fund, which provides refundable income tax credits to property taxpayers. The Nebraska Legislature has appropriated hundreds of millions of dollars annually to this fund in recent years.

Property tax rates vary by county and taxing district. Douglas County (Omaha) and Lancaster County (Lincoln) tend to have effective rates above 2%, while rural counties may have lower rates on residential property but higher rates on agricultural land relative to its use value. Nebraska does not have a homestead exemption for all homeowners, but it does offer a targeted homestead exemption for elderly and disabled residents with limited income.

Nebraska Property Tax Relief Efforts

Property tax reform is the most debated tax issue in Nebraska politics. The state has pursued multiple strategies to reduce the property tax burden on residents and agricultural producers. The Property Tax Credit Fund, established in 2007, returns property tax revenue to taxpayers through refundable income tax credits. In recent years, the Legislature has significantly increased funding for this program, with appropriations exceeding $500 million annually. Additionally, LB 1107 (2020) created the ImagiNE Nebraska Act, which provides incentives for businesses while also directing additional revenue to property tax relief. The state also allows communities to use local option sales taxes to offset property taxes for schools and local services.

Nebraska vs. Neighboring States

Nebraska's tax profile stands out among its neighbors primarily because of its high property taxes:

• Iowa — 4.4%-6.0% graduated income tax, 6% state sales tax, 1.52% property tax. Iowa has slightly higher income tax rates but lower property taxes. Both states are undergoing significant tax reform.
• South Dakota — No income tax, 4.2% state sales tax, 1.14% property tax. South Dakota offers no income tax and lower property taxes. A popular consideration for western Nebraska residents.
• Kansas — 3.1%-5.7% graduated income tax, 6.5% state sales tax, 1.33% property tax. Similar income tax structure but higher sales tax and lower property taxes than Nebraska.
• Colorado — 4.4% flat income tax, 2.9% state sales tax, 0.49% property tax. Colorado offers much lower property taxes and a competitive flat income tax rate.
• Wyoming — No income tax, 4% state sales tax, 0.56% property tax. Wyoming is dramatically more tax-friendly across all categories, making it attractive for western Nebraska residents.

Use our state comparison calculator to see exactly how much you could save in a neighboring state.