State-by-State Guide to Taxes on Retirees

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NICKNAME
The Cornhusker State

BOTTOM LINE: NOT TAX-FRIENDLY
Nebraska doesn't offer any great tax breaks to retirees. Social Security benefits are taxed to the same extent that they are on your federal return. There are no special breaks for military retirees, either. State income-tax rates range from a low of 2.56% to a high of 6.84% on income of more than $27,000 for single filers and more than $54,000 for joint filers. Real estate is assessed at 100% of fair market value. Seniors may qualify for a homestead exemption on property taxes.

STATE SALES TAX
5.5%. Food and prescription drugs are exempt. Local option taxes can add an additional 1.5% to the state rate.

INCOME-TAX RANGE
Low: 2.56% (on up to $2,400 of taxable income for single filers and $4,800 for married couples filing jointly)
High: 6.84% (on taxable income over $27,000 for single filers and $54,000 for married couples filing jointly)

SOCIAL SECURITY
Social Security benefits are taxed to the same extent that they are on the federal return.

EXEMPTIONS FOR OTHER RETIREMENT INCOME
No special breaks for seniors. Out-of-state government pensions are fully taxed.

PROPERTY TAXES
Property is assessed at 100% of its market value. A property-tax credit is provided for all property based on the value. The credit for 2011 was $75.31 for each $100,000 in value.

Tax breaks for seniors: People over age 65 who own and occupy their residence from January 1 through August 15 and meet income restrictions qualify for a homestead exemption that exempts all or a portion of a property’s value from taxation. Single filers earning less than $25,801 and married filers earning less than $30,301 qualify for the maximum exemption of the taxable value of their homestead, up to $40,000 or 100% of the county’s average assessed value of single-family residential properties, whichever is greater.

INHERITANCE AND ESTATE TAXES
There is no estate tax. Nebraska’s inheritance tax ranges from 1% to 18%; assets passing to a spouse or charity are exempt from inheritance taxes.

Visit RetirementLiving.com for a complete rundown of taxes in Nebraska.

States More Tax-Friendly for Retirees

• Our picks of the 10 most tax-friendly states for retirees
• The nine states with no income tax
• The five states with no sales tax
• The five states with the lowest sales taxes (including averages of county/city sales taxes)
• The 36 states that don't tax Social Security benefits

States Less Tax-Friendly for Retirees

• Our picks of the 10 least tax-friendly states for retirees
• The seven states with the highest income tax rate (based on highest tax bracket)
• The five states with the highest sales taxes (including average county/city sales taxes)
• The 22 states that impose their own estate taxes or inheritance taxes