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Official Tax Guide

Nebraska Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Nebraska state taxes. Income tax (Top 5.84%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: Nebraska

Moving to Nebraska involves navigating a distinct tax landscape. While the Cornhusker State does not tax Social Security benefits, it relies heavily on property and sales taxes to fund state services. This guide provides a clear overview of Nebraska’s tax structure for 2025 to help you plan your financial future.

1. Income Tax

Nebraska utilizes a progressive income tax system. While there was recent legislation to move toward a flat tax, the current 2025 structure remains graduated based on income brackets.

  • Top Rate: The highest marginal income tax rate is 5.84%.
  • Structure: Because the system is progressive, your tax rate depends on your income level. Lower-income earners pay a lower percentage, while higher-income earners reach the top rate of 5.84%.
  • Federal Deduction: Nebraska allows for a deduction on federal income taxes paid, which helps lower the overall state taxable income for residents.

2. Sales Tax

The sales tax burden in Nebraska is a combination of state and local rates.

  • State Rate: The base state sales tax rate is 5.5%.
  • Local Taxes: Counties and cities may levy additional local sales taxes. This means the total sales tax rate you pay at the register can vary depending on your specific location within Nebraska, often falling between 5.5% and 7.5%.
  • Use Tax: If you buy items online or from out-of-state vendors without paying sales tax, Nebraska requires you to pay a "use tax" at the same rate as your local sales tax when filing your state return.

3. Property Tax

Nebraska is known for having a higher-than-average property tax burden compared to other states.

  • Overview: While specific rates vary by county and school district, Nebraska property taxes are generally significant. They are primarily used to fund local schools, county governments, and special districts.
  • Assessment: Property taxes are based on the assessed valuation of real estate. Homeowners should anticipate paying rates that are frequently above the national average.
  • Exemptions: Nebraska offers property tax credit programs for qualifying seniors and veterans, which can help offset the burden for eligible residents.

4. Other Taxes

Beyond income, sales, and property taxes, there are other specific taxes to consider when budgeting for life in Nebraska:

  • Gas Tax: Nebraska levies an excise tax on gasoline and diesel fuel. As of 2025, the state gas tax is approximately 28.5 cents per gallon, though this can fluctuate based on legislative changes and wholesale prices.
  • "Sin" Taxes: Excise taxes are applied to specific goods, including alcohol and tobacco products. These rates are subject to state and federal regulations.
  • Inheritance Tax: Nebraska is one of the few states that imposes an inheritance tax. Tax rates vary depending on the relationship to the decedent, ranging from 1% to 18%. However, immediate relatives (such as spouses and direct descendants) often qualify for significant exemptions.
  • Wheel Tax: Most counties and municipalities in Nebraska charge an annual wheel tax for vehicle registration, which varies by location and vehicle type.

5. Retiree Taxes

Nebraska is relatively friendly to retirees regarding income tax, though property taxes remain a consideration.

  • Social Security: Social Security benefits are exempt from Nebraska state income tax.
  • Pensions and 401(k)s: Withdrawals from pensions, IRAs, and 401(k)s are taxable as ordinary income. However, Nebraska provides a tax credit for retirement income for seniors meeting specific income thresholds.
  • Property Tax Relief: Seniors may qualify for the Nebraska Property Tax Incentive Act (PTIC), which provides a credit on property taxes for eligible homeowners.

6. Comparison to Neighbors

Nebraska’s tax profile offers a middle ground compared to its immediate neighbors, balancing income tax relief with higher property taxes.

  • Vs. Iowa: Iowa has moved toward a flat income tax rate (3.9% in 2025), which is lower than Nebraska’s top rate. However, Iowa sales tax rates are generally comparable.
  • Vs. Kansas: Kansas also utilizes a flat income tax rate (currently 5.15% for tax year 2025). Nebraska’s top rate is slightly higher. Both states have similar sales tax bases.
  • Vs. Missouri: Missouri has a progressive income tax structure with a top rate that is generally lower than Nebraska’s. Missouri also offers broader property tax relief programs for seniors.
  • Vs. South Dakota: South Dakota has no state income tax and lower property taxes, making it significantly more tax-friendly for high earners, though sales tax rates can be higher.

DISCLAIMER: Tax laws change frequently and are subject to individual circumstances. The information provided in this guide is for educational purposes only and is based on 2025 data. Consult a qualified CPA or tax professional before making financial decisions.