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Tool | August 2013

State-by-State Guide to Taxes on Retirees

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Nebraska

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The Bottom Line
Map of Nebraska

NOT TAX-FRIENDLY

One of Kiplinger's top ten least tax-friendly states for retirees, the Cornhusker State 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. In 2013, state income tax rates range from a low of 2.46% to a high of 6.84% on income of more than $27,000 for single filers and more than $54,000 for joint filers. Income tax rates were lowered slightly in 2013, and changes in tax bracket thresholds in 2014 will lower tax bills slightly, too. Real estate is assessed at 100% of fair market value, except for agricultural land, which is assessed at 75% of 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 2% to the state rate.

Income Tax Range

Low: 2.46% (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)

Note: For 2014, the rates remain the same but the thresholds change. The low rate will snag up to $3,000 of taxable income for single filers and $6,000 for married couples filing jointly. The high rate will snag taxable income over $29,000 for single filers and $58,000 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. All government pensions, including those from out-of-state, are taxable to Nebraska residents.

Property Taxes

Real estate is assessed at 100% of its market value, except for agricultural land, which is assessed at 75% of market value. Property taxes are determined by multiplying the property’s taxable value by the total consolidated tax rate for the tax district in which the property is located. The tax district is composed of various governing bodies empowered to levy property taxes for services, such as county government, school district and city. The tax rates are expressed as $1 per $100 of taxable value and vary depending on the governing bodies at the property location.

A property tax credit is provided for all real property based on value. The credit for 2013 and 2014 is $80.42 for each $100,000 in value.

Median property tax on the state's median home value of $123,300 is $2,164, according to the Tax Foundation.

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 is a local tax administered by counties and ranges from 1% to 18%; assets passing to a spouse or charity are exempt from inheritance taxes.

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