Nebraska has a progressive income tax ranging from 2.46-4.55% across 3 brackets, applying increasing rates as income rises. This makes Nebraska's tax burden competitive among Midwest states for 2026. At $100K income, you pay $3,670 state tax (3.67% effective rate) - more than Iowa ($3,148), about the same as Missouri ($3,670) and Colorado ($3,692), less than Kansas ($4,780), and (obviously) more than South Dakota (0%, no income tax).
LB754 phased rate cuts — top rate now 4.55% for 2026: Nebraska enacted Legislative Bill 754 in 2023, phasing the top individual income tax rate down from 6.64% (2023) to 5.84% (2024), 5.20% (2025) and 4.55% (2026), with 3.99% scheduled for 2027 under the same law. The LB754 schedule is the law in effect for 2026.
How it compares regionally:
The tradeoff - ag economy stability vs competitive taxes: Nebraska's 2.46-4.55% income tax generates approximately $2.2B annual revenue (2026 projection), funding K-12 education ($2.2B - 35% of budget) and Medicaid expansion ($1.8B). Nebraska's economy is agriculture-dominated (25% of state GDP: corn $8.5B, beef $7.2B, soybeans $6B), which provides recession-resistant stability but limits wage growth (median household income $66K vs $75K national). Warren Buffett's Berkshire Hathaway (Omaha HQ, $900B market cap) and Union Pacific Railroad (Omaha HQ, $145B market cap) contribute significant corporate tax revenue. NE ranks 18th in K-12 education spending, 22nd in healthcare quality, 15th in infrastructure - solid middle-tier outcomes.
Source: Nebraska Department of Revenue - Individual Income Tax
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Source: Nebraska Department of Revenue
Here's what Nebraska residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,395 | $5,215 | $44,785 | 10.4% |
| $75,000 | $7,670 | $2,533 | $10,203 | $64,797 | 13.6% |
| $100,000 | $13,170 | $3,670 | $16,840 | $83,160 | 16.8% |
| $150,000 | $24,734 | $5,945 | $30,679 | $119,321 | 20.5% |
| $250,000 | $51,304 | $10,495 | $61,799 | $188,201 | 24.7% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Nebraska takes $3,670 in state tax alone.
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Migration Trends: According to U.S. Census Bureau data (2021-2022), Nebraska experienced net outmigration of 4,280 residents (brain drain to higher-wage states). Top origin states were:
Outflow: Nebraska lost residents to:
Why people move to Nebraska: Affordable housing (Omaha $260K, Lincoln $275K vs Denver $650K, Kansas City $340K), low unemployment (2.3% - one of lowest nationally), agriculture jobs ($45-70K farm operations, $80-100K ag tech/John Deere), Berkshire Hathaway/insurance jobs (Mutual of Omaha pays $65-95K underwriters), Union Pacific railroad jobs ($70-90K operations), friendly Midwest culture, safe cities (Omaha ranks 30th-safest among 100 largest US cities), excellent public schools (Omaha Westside, Lincoln East rank top 5% nationally).
Why people leave Nebraska: Lower salaries (NE median $66K vs CO $80K, TX $70K, MN $77K), brain drain (U of Nebraska grads leave for Chicago/Minneapolis/Denver higher-wage tech/finance jobs paying 30-50% more), limited urban amenities (Omaha 967K metro feels small vs 3M+ metros), harsh winters (-5°F January lows, windchill -20°F), rural depopulation (western NE counties losing population, young people flee to Omaha/Lincoln or out-of-state), 4.55% income tax vs 0% in SD/WY/TX.
Tax considerations if moving here: NE residency = 183+ days in state OR domicile test. 2.46-4.55% progressive state tax on NE taxable income for 2026. Brackets: $0-4,130 at 2.46%, $4,130-24,760 at 3.51%, $24,760+ at 4.55%. No local income tax anywhere in NE (simple). Sales tax 5.5% state + 0-2% local (Omaha 7%, Lincoln 7.25%) = moderate. Property tax 1.44% average (HIGH - $3,744/year on $260K Omaha home, 6th-highest nationally). Social Security is fully exempt from Nebraska income tax (tax years 2025 and later). Pension and IRA/401(k) income is taxed at NE rates. High property tax plus taxed pension income makes Nebraska less attractive for retirees with large pensions.
| State | Tax Rate | Tax on $100K Income | Difference from Nebraska |
|---|---|---|---|
| Nebraska | 2.46-4.55% | $3,670 | Baseline |
| South Dakota | 0% | $0 | -$3,670 (less tax) |
| Iowa | 3.8% flat | $3,148 | -$522 (less tax) |
| Kansas | 5.2-5.58% | $4,780 | +$1,110 (more tax) |
| Missouri | up to 4.7% | $3,670 | $0 (same) |
Key insight: Nebraska's 2026 rate cut to 2.46-4.55% narrows the gap with lower-tax neighbors, but NE is still not the cheapest in the region. At $100K income, NE ($3,670) is lower than Kansas ($4,780) and Colorado ($3,692), level with Missouri ($3,670), and above Iowa ($3,148). South Dakota and Wyoming remain the regional champions on income tax (0%). Nebraska's economic stability (ag-based recession resistance, Berkshire Hathaway/Union Pacific corporate presence) and excellent public schools (Omaha/Lincoln rank top 5% nationally) strengthen the case for Nebraska.
Total tax burden at $100K + median home: Nebraska (Omaha): $3,670 income + $3,744 property (1.44% × $260K) + $3,500 sales (7%) = $10,914 total (10.9%). South Dakota (Sioux Falls): $0 income + $2,620 property (1.00% × $262K) + $4,500 sales (6.5%) = $7,120 (7.1%). Iowa (Des Moines): $3,148 income + $3,348 property (1.35% × $248K) + $3,500 sales (7%) = $9,996 (10.0%). Result: Nebraska's total burden (10.9%) is now slightly higher than Iowa's (10.0%), not lower — Iowa's real deduction is more generous than this file previously credited it for. SD still wins on total tax by a wide margin (7.1%), but Omaha offers better schools/jobs.
The South Dakota question - Omaha vs Sioux Falls: At $100K: SD saves $3,670 income tax + $1,124 property tax = $4,794/year savings. BUT Omaha median household income $73K vs Sioux Falls $67K (9% higher wages in Omaha), and Omaha has Berkshire Hathaway/Mutual of Omaha/Union Pacific professional jobs paying $80-120K vs Sioux Falls lacking Fortune 500 headquarters. For professionals $150K+: SD saves $5,945 income tax (still meaningful). For middle-income families $75-100K: Omaha wins due to better schools (Westside ranks #38 nationally vs no SD schools in top 100), higher wages (9%), and more jobs.
Nebraska's 1.44% average property tax (6th-highest nationally) results from heavy reliance on property tax to fund K-12 education due to Nebraska's small population (1.96M - 37th-largest state)). At $260K Omaha home: $3,744/year property tax. Nebraska exempts Social Security from income tax (2025 onward) but taxes pension and IRA income, and its property tax is high, so retirees should weigh both.
Nebraska fully exempts Social Security from state income tax beginning with tax year 2025. Pensions, 401(k) and IRA distributions are taxed at the standard 2.46-4.55% rates (2026). Example: Age 68 with $25K SS + $50K pension: the SS is exempt and the $50K pension is taxed after the $8,850 standard deduction, about $1,395 of NE tax (about 1.9% of the $75K total) after the $176 personal exemption credit. Combined with property tax (1.44% = $3,744 on a $260K home), that is roughly $5,139 of annual state/local tax at a modest $75K retirement income.
Under LB754 (2023), Nebraska's top individual rate was 5.20% for 2025, is 4.55% for 2026 and is scheduled to be 3.99% for taxable years beginning on or after January 1, 2027 (Neb. Rev. Stat. 77-2715.03). Any change to that schedule would require new legislation.
Berkshire Hathaway (Omaha HQ since 1962, Warren Buffett CEO, $900B market cap) is Nebraska's largest corporate taxpayer and economic anchor. Berkshire owns 60+ businesses (Geico, BNSF Railway, Nebraska Furniture Mart, Dairy Queen, Duracell, Fruit of the Loom) employing 383K+ worldwide, including 15K+ in Omaha. Nebraska corporate tax revenue from Berkshire: estimated $70-90M/year (NE corporate rate 4.55% on NE-apportioned income). Economic impact: Berkshire's Omaha presence attracts financial/insurance companies (Mutual of Omaha, TD Ameritrade pre-merger, Union Pacific Railroad) creating 50K+ high-wage jobs ($80-120K). Buffett's philanthropy: donated $5B+ to Nebraska orgs (U of Nebraska, Buffett Cancer Center). Buffett has generally favored education funding over income tax cuts. Result: Berkshire's tax payments + job creation helped Nebraska sustain education budgets even as LB754 cut the top rate to 4.55% by 2026.
Nebraska offers excellent agriculture/ag-tech jobs but salaries lag coastal/urban states. Ag jobs: Farm operations manager $50-70K (lower than expected), precision ag/John Deere technician $65-85K (competitive), ag commodities trader/analyst $80-100K (moderate). Compare to income tax: At $70K ag job, NE tax ≈ $2,305 (3.29%) vs IA ≈ $2,008 (2.87%) vs SD $0. Analysis: For farm operations $50-70K, Nebraska works (affordable $260K Omaha housing, low unemployment 2.3%, stable ag economy). For ag-tech professionals $80-100K, Nebraska competitive (access to John Deere R&D, ConAgra HQ, Lindsay Corp irrigation tech). For high earners $150K+, consider TX (0% tax, Houston ag trading) or CA (higher salaries offset 9.3% tax). Nebraska wins for: ag professionals valuing stability + affordable living + excellent schools (Omaha Westside). Loses to: TX/CA for high earners, IA/SD for lower taxes.
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How we calculate: Nebraska uses a progressive tax system with 3 brackets (2.46%, 3.51%, 4.55%) applied to Nebraska taxable income for 2026. Nebraska taxable income is federal AGI minus the $8,850 Nebraska standard deduction for single filers. Our calculator applies the bracket rates to that taxable income and adds federal income tax using official 2026 IRS brackets. Effective tax rates are calculated by dividing total tax by gross income. For comparison purposes, we show neighboring states' tax calculations at the same income levels using their official 2026 tax brackets and rates.
Data sources: Nebraska Department of Revenue: revenue.nebraska.gov - Official 2026 tax brackets (2.46-4.55%), LB754 (2023) phased rate reduction schedule. IRS: Federal tax brackets 2026. U.S. Census Bureau: Migration data (2021-2022), median household income ($66,000 NE). Zillow: Median homes (Omaha $260K, Lincoln $275K, January 2026). Nebraska Department of Agriculture: Ag economic impact ($25B - corn $8.5B, beef $7.2B, soybeans $6B). Berkshire Hathaway: 2024 Annual Report (market cap $900B, 383K employees).
Verification: Nebraska's 2026 brackets (2.46-4.55%, 3 brackets) verified against Nebraska Revised Statutes §77-2715.01 and NE Department of Revenue 2026 guidance. LB754 (2023) phased reduction schedule verified against Neb. Rev. Stat. 77-2715.03: top rate 6.64% (2023), 5.84% (2024), 5.20% (2025), 4.55% (2026), 3.99% (2027). Federal brackets verified against IRS Revenue Procedure 2025-58. Migration data from IRS SOI via Census Bureau. Property/sales tax from NE Department of Revenue 2025 report. Housing data from Zillow (January 2026). Berkshire Hathaway data from 2024 SEC 10-K filing.
Limitations: Assumes single filer, W-2 income only, standard deduction, NE full-year residency. Does not include: county/city sales tax variations (Omaha 7%, Lincoln 7.25%, rural 5.5%), property tax variations by county (1.2-1.8% effective rates, Omaha 1.44% average), federal credits (EITC, child tax credit), part-year/nonresident calculations, retirement income (Social Security is exempt from NE income tax for 2025 and later; pensions and IRA/401(k) income are taxed), agricultural land exemptions ($100K ag land value exempt). Consult licensed NE CPA for: multi-state income, retirement income planning, property tax appeals (1.44%, 6th-highest nationally), business income (C-corps 4.55%, pass-throughs 2.46-4.55% individual rates).
Last Updated: May 2026
Verified By: Daniel · CountryTaxCalc
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Last Updated: May 2026