Nebraska has one of the highest property tax burdens in the country, with a statewide average effective rate of approximately 1.42%–1.44% of home value (SmartAsset: 1.42%, with a $3,739 median annual bill; Tax Foundation: 1.44%) — well above the national average of roughly 0.9%. Property tax is assessed and collected locally by Nebraska's 93 counties, but the state has taken an increasingly active role in providing relief, most significantly through LB34, enacted in a 2024 special legislative session, which restructured how school district tax relief reaches homeowners.
This guide explains how LB34's frontloaded property tax credit works, how it interacts with Nebraska's separate seven-category Homestead Exemption, what changed for the 2025 and 2026 tax years, how effective rates compare across major counties, and a worked example for a home in Douglas County.
For years, Nebraska's main property tax relief mechanism was a refundable income tax credit tied to school district property taxes paid — homeowners had to calculate and separately claim it when filing their state income tax return. LB34, signed into law by Governor Jim Pillen on August 20, 2024, during a special legislative session, restructured this system through two components: the Property Tax Growth Limitation Act and the School District Property Tax Relief Act.
LB34 removed the school district property tax credit from the income tax return, effective for tax years beginning January 1, 2024, and instead applies the credit directly to the property tax statement — meaning most homeowners now see the relief automatically as a reduced bill rather than needing to calculate and claim it later. The initial frontloaded relief totaled approximately $750 million, reducing 2024 property tax statements directly.
Under LB34, the credit is designed to increase by a minimum of 3% each year, with the law directing additional funding toward property tax relief as state revenue grows. For tax year 2026, the minimum funding level for the credit is $180 million, and combined with related community college and homestead exemption programs, the state's total commitment to property tax relief exceeds $1 billion.
During the transition, only community college property taxes paid in a given calendar year continued to be claimable on that year's income tax return, while school district credits moved entirely to the property tax statement — a distinction that caused confusion for some filers during the 2024–2025 transition.
LB34's transition from an income-tax-based credit to a bill-based credit created an unintended timing gap that drew significant legislative attention in 2025.
Because LB34 limited the old refundable income tax credit to tax years beginning before January 1, 2024, taxpayers who paid their 2023 property taxes during calendar year 2024 found themselves caught between the old and new systems — losing an estimated $550 million in relief they would previously have expected to claim. State Senator Brian Hardin, who represented the issue publicly, said the change had "unintentionally shortchanged" Nebraska taxpayers by creating this gap year.
Senator Hardin introduced LB81 in the 2025 session to close the gap by allowing affected taxpayers to claim the refundable credit for taxable years beginning in 2024. The Nebraska Department of Revenue estimated the fix would cost approximately $102 million in FY2024–25, $503 million in FY2025–26, and $32 million in FY2026–27.
As of the most recent legislative reporting available, the Revenue Committee took no immediate action on LB81 and it did not advance out of committee. Homeowners who were affected by the 2023-taxes-paid-in-2024 gap should check directly with the Nebraska Department of Revenue or their legislator's office for the current status of any gap-year fix, since this guide cannot confirm whether the issue has since been resolved through a different bill.
Separate from the LB34 credit, Nebraska's long-standing Homestead Exemption program provides additional property tax relief targeted at specific homeowner categories, administered by the Nebraska Department of Revenue's Property Assessment Division and each county assessor.
For the 2025 base income year, full (100%) relief under the elderly homestead category generally required income below approximately $37,001 for single filers or $43,401 for married filers, with partial relief available on a sliding scale above those thresholds up to a higher cutoff. The Nebraska Department of Revenue resets these income and home value limits annually, typically publishing updated figures in early February.
If a homeowner qualifies for a homestead exemption, they also qualify for the LB34 property tax credit on any remaining tax liability after the homestead exemption is applied — the two programs are designed to stack rather than duplicate or conflict, with the homestead exemption applied first and the LB34 credit calculated on what remains.
Homestead exemption applications (Form 458) are generally due by June 30 of the exemption year, filed with the county assessor.
Because Nebraska property taxes are set by a combination of overlapping local taxing entities (school districts, counties, cities, and special districts), effective rates vary substantially by county. The figures below are approximate county-level effective rates (tax paid as a percentage of home value); treat them as directional, since your specific taxing district's combined rate can differ from the county average.
| County | Approx. Effective Rate | Approx. Median Home Value | Approx. Median Annual Tax |
|---|---|---|---|
| Hall | ~1.81% | $107,700 | $1,951 |
| Sarpy | ~1.69% | $340,100 | $5,733 |
| Douglas | ~1.66% | $290,000 | $4,811 |
| Lancaster | ~1.45% | $287,600 | $4,158 |
| Buffalo | ~1.41%–1.45% | $236,800 | $3,435 |
Beyond these five major counties, Nebraska's full county range runs much wider — from a low of roughly 0.45% in rural Logan County to a high of roughly 1.92% in rural Hayes County — illustrating how sparsely populated counties with small tax bases can end up with either very low or very high effective rates depending on local spending needs relative to total property value.
Sarpy and Douglas counties (the Omaha metro area) combine higher home values with substantial school district and municipal service spending, producing effective rates above the statewide average despite Omaha-area home values also being above the state median — meaning dollar bills there are meaningfully higher than in most of the state.
Douglas County — home to Omaha, Nebraska's largest city — is a useful case study given its size and typical urban tax structure.
Using Douglas County's approximate effective rate of ~1.66%:
$325,000 × 1.66% ≈ $5,395 per year
If a portion of this bill funds the local school district (typically the largest single component of a Nebraska property tax bill, often 50–60% of the total), LB34's frontloaded credit would reduce that school-district portion automatically on the statement — the homeowner does not need to separately calculate or claim this credit on their income tax return. The exact dollar reduction depends on the specific school district's levy and the statewide funding pool for that tax year, so this guide cannot state a precise dollar figure without knowing the homeowner's specific school district.
A homeowner age 65 or older with 2025 income below approximately $37,001 (single) or $43,401 (married) could apply for full relief under Category 1 of the Homestead Exemption by the June 30 deadline — which would be applied before the LB34 credit is calculated on any remaining balance, potentially reducing the effective bill substantially further. A 100% service-connected disabled veteran would qualify for a full exemption regardless of income.
The illustrative $5,395 figure before credits is a reasonable starting point, but Nebraska's actual bill after the LB34 credit and any homestead exemption can differ meaningfully. Use the Nebraska Department of Revenue's Property Tax Look-up Tool, or check directly with the Douglas County Assessor/Treasurer, for a precise post-credit figure specific to your property and school district.
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