Taxes in Nebraska

Despite having a lower cost of living comparatively, Nebraska property taxes remain among the highest in the nation. In 2025, the state continued implementing tax reforms aimed at enhancing competitiveness and providing relief to residents. Below, we explain various Nebraska state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.

For information regarding taxes in other states, see Retirement Taxes by State.

Nebraska Tax Rates

State Sales Tax	5.50%
Avg State/Local Sales Tax	6.97%
Gas Tax	$0.30 per gallon
Diesel Tax	$0.30 per gallon
Cigarette Tax	$0.64 per pack
Income Tax	5.84%
Effective Tax Rate	6.17%
Property Tax	1.44%
Social Security Tax	Partial
Medical/Dental Deduction	None
Federal Income Tax Deduction	None
Retirement Tax	Partial

Nebraska State Taxes Explained

Nebraska Sales Tax

5.5%. Localities can add as much as 2.5%. There is a sales tax and an annual tax on vehicles.

Nebraska Income Taxes

Top rate of 5.84% with additional reductions slated for 2026 and thereafter. This is down from 6.64% in 2024.

Nebraska Property Taxes

Nebraska’s effective property tax rate is 1.44%. The median home value is $257,064, which would incur a $3,702 tax.

Nebraska’s Homestead Exemption is available for those over age 65, veterans with disabilities and their spouses (conditions apply) and qualified disabled individuals. Download the latest Nebraska Homestead Information Guide for income requirements and other details.

Nebraska Retirement Taxes

Minnesota allows a 60% deduction of Social Security benefits included in federal adjusted gross income (AGI). All military retirees may exclude 100% of military retirement benefits from Nebraska taxable income. Federal amount less any state or local income taxes included in those deductions.

Nebraska Estate and Inheritance Taxes

Nebraska has no estate tax but is one of the few states with an inheritance tax of up to 15%, unchanged from 2023. The tax rates and exemptions remain based on the beneficiary’s relationship to the deceased, with immediate relatives taxed at 1% on amounts exceeding $100,000, remote relatives at 11% on amounts over $40,000, and all other beneficiaries at 15% on amounts over $25,000. Surviving spouses remain entirely exempt. Legislative proposals to phase out the inheritance tax by 2028 have been introduced but have not yet been enacted.

Visit the Nebraska Department of Revenue website for tax guides, contact information, and the latest state tax news.