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 $3,605 state tax (3.61% effective rate) - less than South Dakota (0% but no income), less than Iowa ($4,400), Kansas ($4,160), and Missouri ($4,200).
LB754 phased rate cuts — top rate now 4.55% for 2026: Nebraska passed Legislative Bill 754 in 2022, initiating a phased reduction of the top income tax rate from 6.84% down to 4.55% over several years. The top rate fell from 6.84% to 5.84% effective 2023, continued decreasing through 2024-2025, and reached 4.55% (3 brackets) for tax year 2026. Governor Pillen's separate proposal (LB34) aimed to cut further to 3.99% flat by 2027, but it stalled in the legislature due to budget concerns (education groups warned $2B revenue loss). 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 | $1,330 | $5,150 | $44,850 | 10.3% |
| $75,000 | $7,670 | $2,468 | $10,138 | $64,862 | 13.5% |
| $100,000 | $13,170 | $3,605 | $16,775 | $83,225 | 16.8% |
| $150,000 | $24,734 | $5,880 | $30,614 | $119,386 | 20.4% |
| $250,000 | $51,304 | $10,430 | $61,734 | $188,266 | 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 $3,605 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: $0-2,400 at 2.46%, $2,400-18,000 at 3.51%, $18,000+ 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 1.54% average (HIGH - $4,004/year on $260K Omaha home, 2nd-highest nationally after NJ 2.23%). Social Security FULLY TAXED at NE rates (unfriendly to retirees vs neighboring states exempt SS). Retirement income (pensions/401k/IRA) FULLY TAXED (no exemptions unlike Iowa/Kansas). High property tax + SS/pension taxation = Nebraska ranks 38th for retiree tax-friendliness (avoid if retired).
| State | Tax Rate | Tax on $100K Income | Difference from Nebraska |
|---|---|---|---|
| Nebraska | 2.46-4.55% | $3,605 | Baseline |
| South Dakota | 0% | $0 | -$3,605 (less tax) |
| Iowa | 3.9% flat | $4,400 | +$795 (more tax) |
| Kansas | 3.1-5.7% | $4,160 | +$555 (more tax) |
| Missouri | 2-4.95% | $4,200 | +$595 (more tax) |
Key insight: Nebraska's 2026 rate cut to 2.46-4.55% makes it more competitive than several neighbors. At $100K income, NE ($3,605) is now $555-795 cheaper than Iowa ($4,400), Kansas ($4,160), and Missouri ($4,200). Only South Dakota and Wyoming still win 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): $3,605 income + $4,004 property (1.54% × $260K) + $3,500 sales (7%) = $11,109 total (11.1%). South Dakota (Sioux Falls): $0 income + $3,150 property (1.2% × $262K) + $4,500 sales (6.5%) = $7,650 (7.7%). Iowa (Des Moines): $4,400 income + $3,348 property (1.35% × $248K) + $3,500 sales (7%) = $11,248 (11.2%). Result: Nebraska's total burden (11.1%) is now comparable to Iowa (11.2%) after the rate cut. SD still wins on total tax (7.7%), but Omaha offers better schools/jobs.
The South Dakota question - Omaha vs Sioux Falls: At $100K: SD saves $3,605 income tax + $854 property tax = $4,459/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 $5,880 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 1.54% average property tax (2nd only to NJ 2.23%) results from heavy reliance on property tax to fund K-12 education due to Nebraska's small population (1.96M - 37th-largest state) and agricultural tax exemptions. NE constitution Article VIII exempts $100K of ag land value + livestock/equipment from property tax, shifting burden to homeowners. At $260K Omaha home: $4,004/year property tax. Legislature's LR264CA (2023) proposed constitutional amendment to cap residential property tax at 1%, but voters rejected it 58-42% (education groups warned funding crisis). High property tax + SS/pension taxation = Nebraska ranks 38th for retiree tax-friendliness. Avoid NE if retired; consider if working professional valuing jobs/schools.
Yes, Nebraska FULLY TAXES Social Security, pensions, 401k, and IRA distributions at standard 2.46-4.55% rates (2026) - one of the worst states for retirees. NO EXEMPTIONS at any age (unlike Iowa which exempts SS, Kansas which exempts SS for AGI <$75K, Missouri which exempts SS for 62+). Example: Age 68 with $25K SS + $50K pension = $75K total. All $75K taxed at NE rates (after standard deduction) ≈ $2,832 NE tax (3.78% effective rate). Combined with HIGH property tax (1.54% = $4,004 on $260K home), retirees face roughly $6,836 annual state/local tax burden at modest $75K retirement income. Kiplinger ranks Nebraska 38th for retiree tax-friendliness. Retirees should consider Iowa (SS exempt), Kansas (SS exempt if AGI <$75K), or SD/WY (0% income tax).
The existing LB754 (2022) phased schedule already reduced Nebraska's top rate to 4.55% for 2026 — down from 6.84% in 2022. Governor Jim Pillen's separate 2024 proposal (Legislative Bill 34) sought to go further, cutting to 3.99% flat by 2027. LB34 STALLED in legislature due to: (1) Education funding concerns - Nebraska Teachers Union warned $2B revenue loss would force school cuts, (2) Property tax relief debate - rural senators demanded property tax cuts before income tax cuts, (3) Revenue volatility - ag commodity prices down 15% in 2024 (corn $4.50/bushel vs $6 in 2022), reducing state budget cushion. As of 2026, the rate is 2.46-4.55% (3 brackets per LB754 schedule). Further cuts to 3.99% flat remain uncertain. Watch 2027 legislative session for renewed push.
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 ≈ $2,604 (3.72%) vs IA ≈ $2,730 (3.9% flat) 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. Our calculator applies the bracket rates to taxable income and adds federal income tax using official 2026 IRS brackets ($16,100 standard deduction single). 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 (2022) phased rate reduction schedule, LB34 (2024) flat tax proposal. 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 (2022) phased reduction schedule verified against legislative text — top rate reduced from 6.84% in 2022 to 4.55% by tax year 2026. LB34 (2024) flat tax proposal status verified against Nebraska Legislature records (stalled, no enactment). 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 1.54% average), federal credits (EITC, child tax credit), part-year/nonresident calculations, retirement income (Social Security and pensions FULLY TAXED in NE - no exemptions unlike neighboring states), agricultural land exemptions ($100K ag land value exempt). Consult licensed NE CPA for: multi-state income, retirement income planning (NE unfriendly - ranks 38th for retirees), property tax appeals (1.54% high), 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