How Much Is Income Tax in Nebraska?

Understanding Nebraska’s Income Tax System

Nebraska imposes a state-level income tax on its residents, separate from federal income tax obligations. This state tax applies to individuals earning income within Nebraska. The tax system in Nebraska is progressive, meaning higher income levels are subject to higher tax rates.

Unlike some other states, Nebraska does not have local income taxes levied by cities or counties.

Nebraska Individual Income Tax Rates and Brackets

For 2024, Nebraska uses a graduated income tax system with four brackets, ranging from 2.46% to 5.84%. Rates depend on taxable income and filing status, with different portions of income taxed at varying rates.

For single filers, the 2.46% rate applies to income up to $2,999. The rate increases to 3.51% for income between $3,000 and $17,999, and to 5.01% for income between $18,000 and $28,999. Income over $28,999 is taxed at 5.84%.

Married individuals filing jointly have different 2024 brackets: 2.46% up to $5,999; 3.51% for $6,000-$35,999; 5.01% for $36,000-$57,999; and 5.84% for income over $57,999. Head of household filers also have distinct brackets, with the lowest rate applying to income up to $5,599 and the highest rate for income over $42,999.

Adjusting Your Taxable Income

Taxpayers can reduce their gross income to arrive at taxable income through various adjustments. Nebraska allows for either a standard deduction or itemized deductions. For 2024, the standard deduction amounts are $8,350 for single filers and married filing separately, $12,250 for head of household, and $16,700 for married filing jointly or qualifying surviving spouses. Taxpayers can choose to itemize if their itemized deductions exceed the standard deduction, including expenses like medical bills, state and local taxes, mortgage interest, and charitable contributions.

Beyond deductions, various tax credits can directly reduce the amount of tax owed. Nebraska offers a refundable Child Care Tax Credit for parents and guardians of children age five or younger. For 2024, eligible families with household income up to $75,000 could receive $2,000 per child, while those with income between $75,001 and $150,000 could receive $1,000 per child. This credit is refundable.

Another significant credit is the Property Tax Credit, which provides relief for property taxes paid to schools and community colleges. For 2024, the school district portion of this credit is applied directly to the real estate tax statement, while the community college portion is still claimed on the state income tax return. Additionally, Nebraska offers an Earned Income Credit, which is 10% of the federal Earned Income Tax Credit, and a credit for taxes paid to other states to prevent double taxation. Contributions to a Nebraska College Savings Plan can also be deducted from federal AGI.

Calculating and Filing Your Nebraska Income Tax

Nebraska income tax calculation builds upon federal tax information. The calculation starts with federal adjusted gross income (AGI). From this AGI, Nebraska-specific adjustments are applied, which include any additions or subtractions, such as qualifying deductions like the standard or itemized deductions. The resulting amount is then used to determine the preliminary tax liability by applying Nebraska’s progressive income tax rates and brackets. Finally, any applicable tax credits are subtracted from this preliminary tax to arrive at the final tax owed or the refund due.

When it comes to filing, individuals have several options for submitting their Nebraska income tax return. Many choose to e-file through approved tax software or the Nebraska Department of Revenue’s (DOR) online portal, NebFile. Returns can also be filed by mail. The general deadline for filing Nebraska individual income tax returns is April 15, aligning with the federal deadline. If this date falls on a weekend or holiday, the deadline shifts to the next business day.

For those who owe taxes, various payment methods are available. Taxpayers can pay online via the DOR’s e-pay system, which allows for direct debit from a bank account, or through credit card payments, though a convenience fee may apply for credit card transactions. Payments can also be made by check or money order, accompanied by a payment voucher. If a taxpayer cannot pay the full amount by the due date, payment plans can often be arranged with the Department of Revenue. Official forms and detailed instructions are available on the Nebraska Department of Revenue’s website for comprehensive guidance.