How Much Is Nebraska State Income Tax?

Nebraska’s state income tax is a levy imposed by the state government on an individual’s earnings. This tax operates independently from the federal income tax system. Funds collected through state income tax contribute to various state-funded services and programs, supporting the infrastructure and public services of Nebraska. Understanding how this tax is structured helps residents navigate their financial obligations to the state.

Nebraska Income Tax Rates

Nebraska employs a progressive income tax system, meaning different portions of an individual’s income are taxed at increasing rates. For the 2024 tax year, the state’s income tax structure includes four distinct brackets. These rates vary based on the taxpayer’s filing status, such as single, married filing jointly, or head of household. The lowest rate for all filing statuses is 2.46%, applying to the initial segment of taxable income. The highest rate for 2024 is 5.84%, which applies to income exceeding certain thresholds depending on filing status.

For single filers and those married filing separately, income up to $2,999 is taxed at 2.46%. The rate increases to 3.51% for income between $3,000 and $17,999, then to 5.01% for income from $18,000 to $28,999. Any taxable income above $29,000 for these filers is subject to the 5.84% rate.

Married individuals filing jointly have their first $5,999 taxed at 2.46%, with subsequent brackets at $6,000-$35,999 (3.51%), $36,000-$57,999 (5.01%), and income over $58,000 at 5.84%. Head of household filers face rates of 2.46% for income up to $5,599, 3.51% for $5,600-$28,799, 5.01% for $28,800-$42,999, and 5.84% for income above $43,000.

State tax laws and rates can change. Therefore, taxpayers should always consult official Nebraska Department of Revenue publications for the most current information.

Calculating Your Nebraska Taxable Income

Determining Nebraska taxable income involves a process that begins with gross income and then applies adjustments, deductions, and exemptions. This calculation establishes the amount of income subject to the state’s tax rates. Gross income includes various sources such as wages, salaries, business income, interest, dividends, and capital gains.

Certain adjustments can reduce gross income to arrive at an adjusted gross income (AGI) for state tax purposes. For instance, contributions made to the Nebraska College Savings Program (NEST) are deductible from federal adjusted gross income, up to specified limits. Additionally, amounts received as annuities under the Civil Service Retirement System may qualify for a decreasing adjustment from federal AGI.

Taxpayers can further reduce their taxable income by claiming either the Nebraska standard deduction or itemized deductions. For 2024, the standard deduction amounts are $8,350 for single filers and married individuals filing separately, $12,250 for heads of household, and $16,700 for married couples filing jointly or qualifying surviving spouses. If a taxpayer itemizes deductions on their federal return, they may use their federal itemized deductions, minus state and local income taxes claimed on Federal Schedule A, if this amount is greater than the Nebraska standard deduction.

Common itemized deductions can include medical and dental expenses exceeding 7.5% of AGI, state and local taxes up to $10,000, mortgage interest, and charitable contributions. These deductions help further reduce the amount of income subject to taxation.

Nebraska also allows for personal exemptions, which are claimed as tax credits and directly reduce the tax owed. For 2024, each personal exemption, including those for dependents, reduces the tax liability by $171.

Reducing Your Tax with Credits

Tax credits directly reduce the amount of income tax owed, providing a dollar-for-dollar reduction in tax liability. This differs from deductions, which reduce taxable income. Nebraska offers several credits that can help reduce a taxpayer’s final tax bill.

One significant credit is the Property Tax Credit, a refundable credit for property taxes paid to school districts and community colleges. For 2024, this credit primarily applies to community college property taxes, as school district property tax relief is now provided directly on property tax statements.

Another available credit is the Child Care Tax Credit, which is refundable for eligible parents and legal guardians. This credit applies to children five years old or younger as of December 31 of the tax year, with a household income of $150,000 or less. Qualifying families can receive $2,000 per child if their household income is $75,000 or less, or $1,000 per child if their income is between $75,001 and $150,000. The child must be enrolled in a licensed child care program or receive care from an approved license-exempt provider.

Nebraska also offers an Earned Income Tax Credit (EITC), which is a refundable credit equal to 10% of the federal EITC amount. This credit is designed to assist low to moderate-income working individuals and families.

Additionally, the state has a School Readiness Tax Credit for eligible childcare and education providers and staff, which was restored for 2024 with both nonrefundable and refundable components. There is also a nonrefundable Child Care Contribution Tax Credit for individuals who make qualifying contributions to child care programs, allowing them to claim 50% or 75% of their contribution, up to a maximum of $25,000 or 50% of their state income tax liability.

Filing and Payment Obligations

Taxpayers generally need to file a Nebraska income tax return if they are required to file a federal income tax return. This also applies to residents with $5,000 or more in net Nebraska adjustments to federal adjusted gross income, and partial-year residents or non-residents with income derived from Nebraska sources. A taxpayer’s Nebraska filing status typically aligns with their federal filing status.

The annual deadline for filing Nebraska individual income tax returns is April 15, or the next business day if April 15 falls on a weekend or holiday. An automatic six-month extension to file is granted if a federal extension is also filed. However, an extension to file does not extend the time to pay any tax due; payment is still required by the original April 15 deadline.

Various methods are available for paying Nebraska state income tax. Taxpayers can make payments online through the Nebraska Department of Revenue’s e-pay system, which allows for direct debit from a bank account. Payments can also be made using a credit or debit card, though a convenience fee is typically charged by the processing vendor. For those preferring traditional methods, payments can be submitted by mail using a check or money order. Additionally, taxpayers who need more time to pay their balance may be able to set up a 90-day payment plan through the Department of Revenue’s website.