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Nebraska State Taxes: What You’ll Owe in the 2026 Tax Season

Valerie Bauman,

AARP

Published May 21, 2026

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Nebraska has reduced its individual income tax rates in recent years, but the state ranks among those with the highest property tax rates in the country, according to the Tax Foundation.

The big picture:

Income tax: The state has a graduated individual income tax with rates between 2.46 percent and 5.2 percent.
Property tax: The average property tax in the state is 1.44 percent of a home’s assessed value, although rates vary by county, according to the latest data from the Tax Foundation.
Sales tax: The combined average state and local sales tax rate is 6.98 percent, according to the Tax Foundation. That includes the statewide 5.5 percent rate and the average local sales tax of 1.48 percent. The maximum local sales tax is 2 percent. Local sales tax rates can be found here.

How is income taxed?

The state has a graduated individual income tax with rates between 2.46 percent and 5.2 percent. The brackets are outlined in the tables below:

What about investment income?

Capital gains are part of a resident’s federal adjusted gross income and generally are taxed that way, except for certain exemptions that can be calculated on form 4797N.

Are Social Security benefits taxed?

The state has phased out taxing Social Security, and 2025 was the first year when it was 100 percent exempt from state taxes. However, residents may owe federal taxes on their Social Security income.

How is property taxed?

The average property tax in the state is 1.44 percent. However, rates vary by county, from the lowest of 0.45 percent in Logan County to the highest of 1.92 percent in Hayes County. The lowest median amount paid was $929 in Grant County, while the highest was $5,473 in Sarpy County, according to the latest data from the Tax Foundation.

What about sales and other taxes?

Sales tax: Nebraska has a statewide sales tax of 5.5 percent, although the combined average state and local sales tax rate is 6.98 percent. Local sales tax rates can be found here. Exemptions include feminine hygiene products, medication and medical equipment, newspapers and residential water service. A full list is available here.
Gas and diesel: Gas and diesel are taxed at 31.8 cents per gallon.
Vehicle tax: Auto purchases are subject to the state’s 5.5 percent sales tax plus any local sales tax, based on where the customer lives. In addition to registration fees, the state also imposes an annual motor vehicle tax based on the manufacturer’s suggested retail price (adjusted as the car ages) until the vehicle reaches 14 years, after which there is no longer an annual tax. The state also imposes a motor vehicle fee based on value, weight or use of the vehicle. In some cases, it’s adjusted as the car ages. The tables for finding the annual motor vehicle tax and fee rates are here.
Alcohol: The state applies a 5.5 percent sales tax on spirits, wine and beer. Local jurisdictions add their own tax. In addition, the state has an excise tax on alcohol that is paid by distributors and wholesalers and can be passed on to consumers.
Lottery: All winnings are subject to state and federal income tax, with prizes of more than $5,000 automatically having 3.5 percent withheld in state taxes and 24 percent in federal taxes. The actual Nebraska taxes due and rates applied are based on the state’s income tax brackets.

Will my heirs or estate have to pay inheritance and estate tax?

Nebraska has an inheritance tax applied at the county level that governs the transfer of finances and goods from a decedent to an institution or a person who will inherit them. The tax is based on the fair market value of what the decedent owned. For direct relatives – parents, children and other descendants – the tax is 1 percent of the market value of the property received by each person in excess of $100,000. More distant relatives, such as siblings, nieces and nephews, must pay 11 percent of the clear market value on anything above $40,000, while all others (unrelated friends, etc.) must pay 15 percent on anything with a clear market value over $25,000.

Are there any tax breaks for older residents?

Homestead exemption: Residents may be eligible for this property tax relief if they are 65 or older or a qualified disabled individual. . Veterans with a service-connected permanent disability or veterans who are temporarily disabled and receiving 100 percent compensation from the Department of Veterans Affairs because they are unemployable qualify for the exemption. In addition, the surviving spouses of qualifying veterans, those with a developmental disability, or veterans whose home was significantly contributed to by the VA may be eligible.

Residents must own and occupy their home from Jan. 1 through at least Aug. 15 of each year. The program has income limits and a sliding benefit scale that applies for people 65 years of age and older and qualified disabled individuals. For the 2026 application year, single individuals age 65 or older with a household income of less than $37,001 or less, and those married with household income of less than $43,401, may be eligible for a 100 percent reduction in property taxes. The maximum income to receive the smallest benefit of 10 percent is less than $59,001 for a single, disabled person and less than $68,701 for those disabled and married. More details are available here.

Are military retirement pensions taxed?

Nebraska does not tax military pensions.

What is the deadline for filing taxes in 2026?

Tax returns for 2025 were due April 15, 2026. If a taxpayer requested an automatic six-month extension, they have until Oct. 15 to file their return, although taxes due should have been paid by April 15. If taxpayers are filing for a federal extension, they don’t need to file for a state extension. It is only necessary to file a Nebraska extension of time if taxpayers are making a tentative tax payment or when a federal extension is not filed. An extension of time to file does not stop interest from accruing on unpaid tax.

More AARP Financial Resources

AARP Retirement Calculator Determine if you are saving enough to retire when — and how — you want.
AARP Social Security Calculator Figure out when to claim and how to maximize your Social Security benefits.
AARP Tax Tools Explore resources to help you calculate and prepare taxes.

Valerie Bauman is a journalist and author with two decades of experience working for publications, including Newsweek, Bloomberg and The Associated Press. Throughout her career, she’s covered politics and the law, including pharmaceutical litigation, mass torts and election law.