What Changes in Your Paycheck in Nebraska
Your paycheck in Nebraska shows a Nebraska state income tax line item that grows progressively through four brackets, starting at 2.46% for the first $1-$1. However, because the brackets are compressed at the bottom, most middle and high earners quickly reach the 6.84% rate on most of their income. For a $1 salary, you might see ~ $1-$1 annually (~ $1-$1 per biweekly paycheck) for state tax, reflecting effective rates around 5.5%-6%. Nebraska paychecks only show state and federal tax deductions—no local income tax line items. The progressive brackets mean your state tax increases as you move through brackets, with higher earners reaching the 6.84% top rate. Retirees see no state tax on retirement income distributions, making Nebraska attractive for those relying on retirement savings.
Example State Tax in Nebraska
What you'll pay in Nebraska state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $2,395 | 4.8% |
| $75,000 | $4,105 | 5.5% |
| $100,000 | $5,815 | 5.8% |
| $150,000 | $9,235 | 6.2% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
Understanding Nebraska Taxes
Who Benefits
Nebraska works best for lower and middle-income earners (under ~ $1 for singles, $1 for couples) who benefit from the progressive brackets with lower starting rates (2.46%-5.01%). At these income levels, effective state tax rates are 3%-5%, which can be competitive with or lower than some flat-tax states Retirees also benefit from exemptions on Social Security and most retirement income, making Nebraska attractive for those relying on retirement savings.
Who May Not Benefit
Nebraska is challenging for high earners (~ $1+ for singles, $1+ for couples) because the compressed brackets mean most of their income is taxed at the top 6.84% rate. Someone earning $1 in Nebraska pays an effective rate around 5.5%-6% (~ $1-$1 annually), while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT), and in North Carolina would pay $1 (4.75% flat). High earners with geographic flexibility save $1-$1+ annually by moving to lower-tax states.
Key Facts That Affect Your Take-Home Pay
- Nebraska uses a progressive income tax system with four brackets, starting at 2.46% for the first $1 of income (single) or $1 (married) and escalating to a top rate of 6.84% for income above $1 (single) or $1 (married), making Nebraska's bracket structure relatively simple with compressed brackets at low income levels.
- Nebraska's progressive brackets are compressed at the bottom, meaning the first three brackets cover relatively low dollar amounts ($1-$1 for singles, $1-$1 for married), so most middle and high earners quickly reach the top 6.84% rate. For a $1 earner, ~ $1+ of income is taxed at 6.84%, making the effective rate around 5.5%-6%, not the top 6.84% rate.
- Nebraska does not charge municipal income taxes, ensuring uniform deductions across all locations. All Nebraska residents have the same income tax structure—only the state progressive brackets apply.
Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay the top 6.84% on all my income in Nebraska.' Reality: Nebraska's progressive system starts at just 2.46% for the first $1-$1 of income (depending on filing status), and most middle-income earners pay effective rates around 5%-6%, not 6.84%. The 6.84% rate only applies to income above $1 (single) or $1 (married). Someone earning $1 pays an effective rate around 5.5%-6% (~ $1-$1 annually).
Misconception: 'Nebraska has low taxes because it's a Midwestern state.' Reality: Nebraska's income tax starts at 2.46% (relatively low starting rate) and tops out at 6.84%, which is moderate compared to some progressive states but higher than flat-tax states. A $1 earner pays an effective rate around 5.5%-6%, while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT). Nebraska's compressed brackets mean most earners reach higher rates quickly.
Misconception: 'No local taxes means Nebraska is cheaper than other states.' While Nebraska avoids local income tax complications, the progressive income tax with a 6.84% top rate combined with sales taxes (5.5%-7.5% in some areas) and property taxes can still create a tax burden. A high earner in Nebraska pays 6.84% on income above $1-$1, while a high earner in a flat-tax state like Pennsylvania pays 3.07% flat (though PA may have local EIT). Factor in all taxes when comparing Nebraska to other states.
One Thing to Know
Nebraska's compressed brackets mean most earners hit the 6.84% top rate quickly, making the effective rate higher than many people expect for a Midwestern state. The 6.84% rate is significantly higher than neighboring flat-tax states like Kansas (5.7% top) or Iowa (8.53% top).
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with Nebraska tax laws.