The Tax Foundation

Research Areas

Nebraska

The Facts on Nebraska’s Tax Climate

Here are some basic facts on Nebraska’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 19 in Nebraska
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Nebraska taxpayers had to work until April 19 to pay their total tax bill, ranking it 25th in the nation. This is one week before national Tax Freedom Day (April 23). The Tax Freedom Days of neighboring states are: South Dakota, April 12 (ranked 41st nationally); Iowa, April 16 (ranked 34th nationally); Missouri, April 14 (ranked 36th nationally); Kansas, April 18 (ranked 26th nationally); Colorado, April 23   (ranked 15th nationally); and Wyoming, April 20 (ranked 21st nationally).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Nebraska's State/Local Tax Burden Among Nation's Highest in 2007
Estimated 11.9% of income, Nebraska's state and local tax burden percentage stands at 9th highest, well above the national average of 11.0%. Nebraskans pay $4,549 per-capita in state and local taxes, and per capita state income is $38,373.
Nebraska's State-Local Tax Burden, 1970-Present

Nebraska's 2008 Business Tax Climate Ranks 43rd
Nebraska ranks 43rd in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: South Dakota (2nd), Iowa (45th), Missouri (15th), Kansas (33rd), Colorado (13th) and Wyoming (1st).  
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Nebraska's Individual Income Tax System
Nebraska's personal income tax system consists of four separate brackets with a top rate of 6.84%, kicking in at an income level of $27,000. Among states levying an individual income tax, Nebraska's top rate ranks 17th highest nationally.  Nebraska's 2005 individual income tax collections were $793 per person, which ranked 22nd highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Nebraska's Corporate Income Tax System
Nebraska's corporate tax structure consists of two brackets with a top rate of 7.81%, kicking in at an income level of $50,000. Among states levying corporate income taxes, Nebraska's top rate ranks 19th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $148.33 per capita, which ranked 22nd highest nationally. 
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Nebraska Levies Sales Tax Slightly above National Median

Nebraska levies a 5.5% general sales or use tax on consumers, which is just slightly above the national median of 5.4 percent. State and local governments combined collected approximately $1,319 per capita in general sales taxes in 2005, ranking 17th highest nationally. Nebraska's gasoline tax is a variable tax that is adjusted for inflation on a quarterly basis. The gasoline tax currently stands at 23.9 cents per gallon and ranks 25th highest nationally. Nebraska's cigarette tax stands at 64 cents per pack of twenty, ranking 34th highest nationally. The sales tax was adopted in 1967, the gasoline tax in 1925 and the cigarette tax in 1947.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Nebraska Property Taxes: Comparatively High
Nebraska is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. Nebraska's localities collected $2,004,782,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections.  At the state level, Nebraska collected $2,336,000 in property taxes during FY 2004, making its combined state/local property taxes $2,007,118,000. That brings its per capita collection to $1,148, ranking 16th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Nebraska is a Beneficiary State
Nebraska taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of Federal tax collected in 2004, Nebraska citizens received approximately $1.10 in the way of federal spending. This ranks the state 25th highest nationally and represents an increase from 1995, when Nebraska received $1.01 per dollar of taxes in federal spending (30th highest). Neighboring states and the amount of federal dollars they received per dollar collected in federal taxes were: South Dakota ($1.53), Iowa ($1.10), Missouri ($1.32), Kansas ($1.12), Colorado ($0.81) and Wyoming ($1.11).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

 

Articles from the Tax Foundation