Nebraska is phasing down its income tax to a flat 3.99% by 2027 — the biggest income tax cut in state history. For 2026, the top rate is approximately 4.55%.
For 2026, Nebraska's top rate is approximately 4.55%. The state standard deduction is roughly $7,900 (single) / $15,800 (married). The phasedown schedule can accelerate if Nebraska tax revenues exceed projections. No Nebraska city or county levies a local income tax on wages. Nebraska also exempts Social Security from state income tax for residents with income below $44,460 (single) / $59,100 (married).
In 2023, Nebraska enacted LB 754 — the most significant income tax reduction in the state's history. The law phases Nebraska's top income tax rate from 6.84% (2022) down to a flat 3.99% by tax year 2027. For many Nebraskans, particularly higher earners, this represents a reduction of nearly 3 percentage points on their state income tax bill. On a $100,000 income, the difference between the old 6.84% top rate and the new 3.99% rate is nearly $2,850 per year in additional take-home pay — once fully phased in.
The rate in 2026 sits at approximately 4.55% — the second-to-last step before the 3.99% destination. Nebraska workers are paying meaningfully less than they were just a few years ago, and will see their rate drop again by the time they file 2027 taxes. The phasedown schedule includes revenue trigger provisions: if Nebraska's general fund receipts exceed projections, the rate can accelerate to 3.99% ahead of schedule.
Omaha's economy is diverse and surprisingly corporate-heavy. Nebraska is home to a disproportionate number of Fortune 500 and Fortune 1000 headquarters for its population size: Berkshire Hathaway (Warren Buffett's conglomerate), Union Pacific, Mutual of Omaha, TD Ameritrade (now part of Schwab), Cabela's (parent company), and ConAgra Foods are all headquartered in or near Omaha. This concentration of corporate headquarters brings well-paid white-collar jobs to an otherwise agricultural state. For finance and insurance professionals, Omaha offers Midwest cost of living with coastal corporate salaries — and now, significantly reduced state income taxes.
Nebraska's agricultural economy anchors the rest of the state. Lincoln (home of the University of Nebraska), Grand Island, Kearney, Bellevue, and Norfolk all serve as regional economic centers. The Sandhills region, Platte River Valley, and panhandle communities are heavily agricultural. For farmers and ranchers, Nebraska's income tax changes are meaningful — net farm income can be volatile but significant in good years, and a lower flat rate is more predictable than a graduated system.
Estimates only. NE 2026 rates: ~3.51% on first $35,730 (single) / $71,460 (married), ~4.55% above. Std deduction ~$7,900 (single) / $15,800 (married). Actual withholding may differ slightly. Consult a tax professional.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| Nebraska State Tax (~4.55% top) | −$0.00 |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
For tax year 2026, Nebraska's top income tax rate is approximately 4.55% — one step in a phasedown toward a flat 3.99% by tax year 2027. Nebraska uses a two-bracket structure: approximately 3.51% on the first $35,730 of taxable income (single) and 4.55% above. The standard deduction is approximately $7,900 (single) / $15,800 (married). Nebraska enacted LB 754 in 2023 to achieve this phasedown from the prior 6.84% top rate.
Nebraska is scheduled to reach a flat 3.99% rate for tax year 2027, meaning you'd pay it on income earned in 2027 and file in 2028. If Nebraska's general fund tax receipts exceed projections, the rate phasedown can accelerate — reaching 3.99% sooner. Workers in Nebraska will see their state income tax decline every year through 2027 under the current law.
Nebraska has been phasing out the taxation of Social Security benefits. For 2026, Social Security is substantially or fully exempt for most Nebraska retirees. Specifically, Social Security benefits are exempt from Nebraska income tax for filers with income below $44,460 (single) / $59,100 (married). Nebraska plans to complete the full phase-out of Social Security taxation by 2025–2026. Retirees should verify their exemption status with the Nebraska Department of Revenue.
Omaha (Nebraska) is better than Kansas City (Kansas, 5.7% top) but slightly higher than Kansas City (Missouri, 4.95% top) and broadly comparable to Des Moines (Iowa, 3.8% flat). By 2027, Nebraska's 3.99% flat rate will be lower than Kansas (5.7%), Missouri (4.95%), and comparable to Iowa (3.8%). For Omaha workers comparing costs with the broader Midwest, Nebraska's tax competitiveness is improving significantly year by year.
No. Omaha, Lincoln, Bellevue, Grand Island, and all other Nebraska municipalities do not levy local income taxes on wages. Nebraska workers pay only state income tax — no city or county surcharge of any kind.
On $70,000 (single, biweekly), Nebraska withholds approximately $95–$110 per paycheck in state income tax — roughly $2,450–$2,800 annually. After the ~$7,900 standard deduction, taxable income is about $62,100. Applying the 2026 brackets, Nebraska state tax is roughly $2,500–$2,700. The effective state rate on gross pay is approximately 3.6–3.9%.
Nebraska taxes overtime and tips at regular state income tax rates. The federal exemptions under the One Big Beautiful Bill apply only to federal income tax — Nebraska has not enacted state-level equivalents. See our Overtime Tax Calculator and Tips Tax Calculator for federal savings amounts.
Nebraska is rapidly improving its competitive position for high earners under LB 754. The 3.99% flat rate by 2027 will be one of the lower income tax rates in the Midwest, below Kansas (5.7%), Missouri (4.95%), and Minnesota (9.85%). Combined with Omaha's low commercial real estate costs, no city income taxes, and central US logistics position, Nebraska is increasingly competitive for business owners who might otherwise choose Texas or Florida. The primary drawback is the perception issue — Nebraska still carries its old 6.84% top rate in people's memories, even though actual rates are now substantially lower.