Nebraska is in the middle of a major income tax cut. Both the corporate and personal top rates are 4.55% for 2026, down from 5.2% and 5.84% just a few years ago, and both fall to 3.99% in 2027. The state sales tax is 5.5% plus local add-ons, and property taxes are high, though the state offers refundable credits to offset part of them.
This guide covers Nebraska's business taxes for 2026, with worked examples and comparisons with its six neighbors.
Nebraska business taxes at a glance
A Nebraska C corporation pays 4.55% on its profit in 2026, falling to 3.99% in 2027. Pass-through owners pay graduated rates that reach 4.55% at about $25,000 of taxable income, so most business profit is effectively taxed at 4.55%. Customers pay 5.5% state sales tax plus local taxes of up to 2.5% in most cities. Property taxes are among the highest in the region, but businesses can claim refundable income tax credits for part of their school and community college property taxes. Forming a business requires newspaper publication, but biennial reports are inexpensive. Incentives under the ImagiNE Nebraska Act reward investment and job creation.
Corporate income tax
| Tax year | Corporate rate |
|---|---|
| 2023 | 7.25% top rate (5.58% on the first $100,000) |
| 2024 | 5.84% |
| 2025 | 5.2% |
| 2026 | 4.55% |
| 2027 onward | 3.99% |
LB 754, passed in 2023, set this schedule. As the top rate fell below the old 5.58% lower-bracket rate, Nebraska's corporate tax effectively became a single rate.
- Apportionment: Single sales factor.
- Combined reporting: Required for unitary groups.
- Credits: ImagiNE Nebraska Act incentives for investment and new jobs, research credits and refundable property tax credits.
- Returns: Form 1120N is due on the 15th day of the fourth month after year-end.
Personal income tax and pass-through owners
| Taxable income (single, 2026, approx.) | Rate |
|---|---|
| $0 to $4,130 | 2.46% |
| $4,130 to $24,760 | 3.51% |
| Over $24,760 | 4.55% |
- Social Security benefits are fully exempt from Nebraska tax.
- LLC owners, partners and sole proprietors pay these rates on profit.
- S corporation shareholders pay on their share.
- PTE election: Partnerships and S corporations can elect to pay tax at the entity level.
- Capital gains exclusion: Employees can make a one-time election to exclude gains on employer stock in limited cases.
Sales and use tax
| Component | Rate |
|---|---|
| State sales tax | 5.5% |
| Local sales taxes | Up to 2.5% (higher with voter approval for some cities) |
| Average combined rate | About 6.98% |
- Groceries are exempt.
- Services: Nebraska taxes some services, including building cleaning, pest control, motor vehicle repair and some data services.
- Remote sellers with more than $100,000 of Nebraska sales or 200 transactions must collect.
- Manufacturing machinery and agricultural inputs are exempt.
Property taxes and credits
Nebraska's property taxes are high, especially on agricultural land and commercial property in Omaha and Lincoln. The state offsets part of the burden with refundable income tax credits:
- School district property tax credit: A refundable credit for a percentage of school district property taxes paid, set annually.
- Community college property tax credit: A refundable credit for property taxes paid to community colleges.
Business personal property, such as equipment, is also taxed, with a $10,000 exemption per taxpayer per county.
Payroll taxes
- Unemployment insurance: Employers pay on the first $9,000 of each employee's wages, with higher wage bases for some employers. New employers start at 1.25%.
- Minimum wage: Rose to $15 in 2026 under the 2022 ballot measure.
- Paid sick leave: Required for most employers under a 2024 ballot measure, as amended in 2025.
Forming a business in Nebraska: fees and ongoing costs
| Item | LLC | Corporation |
|---|---|---|
| Formation filing fee | $100 online | $100 online (plus fees based on capital stock) |
| Publication | Required for three weeks | Required for three weeks |
| Biennial report | $25 online, $30 paper (odd years) | Occupation tax based on paid-up capital (minimum about $26) |
| Registered agent | Required | Required |
Worked example: $500,000 of profit
| Step | Amount |
|---|---|
| Taxable income | $500,000 |
| Nebraska corporate tax at 4.55% | $22,750 |
| Federal tax at 21% on $477,250 | $100,223 |
| Total income tax | $122,973 (24.6%) |
At the 2027 rate of 3.99%, the Nebraska tax would fall to $19,950. For a single LLC owner with $150,000 of Nebraska taxable income, state tax is about $6,524. At $75,000 it is about $3,112.
How Nebraska compares with its neighbors
Nebraska's rates are now in line with Colorado and Missouri and below Kansas. South Dakota and Wyoming have no income tax, and Iowa's personal income tax is lower. The 2027 cut to 3.99% will make Nebraska one of the lower-tax states in the region for corporations.
Choosing an entity in Nebraska
- LLC: $100 to form, publication costs and a small biennial fee. Owners pay up to 4.55%.
- S corporation: Same personal rates, with federal payroll tax savings.
- C corporation: 4.55% in 2026 and 3.99% from 2027, plus 21% federally.
With corporate and personal top rates now equal, the state income tax rarely drives entity choice in Nebraska.
Who pays the most in Nebraska
Property taxes are the biggest burden for many Nebraska businesses, especially farms, ranches and commercial property owners in the larger cities. The refundable credits recover only part of these taxes. Income taxes, once a weakness, are now moderate and falling. Retailers in Omaha and Lincoln collect 7% or more in combined sales tax, but Nebraska exempts groceries and manufacturing machinery.
Tax planning tips for Nebraska businesses
Claim the refundable property tax credits. Both credits require you to list property tax payments on your income tax return. Because they are refundable, they put cash back in your pocket even if you owe no income tax.
Apply for ImagiNE Nebraska incentives early. The program offers wage credits, investment credits and sales tax refunds, but you must apply before making the investment or hiring.
Budget for publication. Newspaper publication is required within three months of formation, and failing to publish can affect an LLC's legal status.
Doing business across Nebraska
Most of Nebraska's population and business activity is concentrated in the Omaha and Lincoln metropolitan areas along the eastern edge of the state. Omaha is home to several Fortune 500 headquarters, a large insurance and financial services sector and a growing technology industry, while Lincoln has the state government and the University of Nebraska. Businesses in these cities pay higher combined sales tax and property tax rates than those in rural areas. Western Nebraska's economy is dominated by agriculture, where property tax on land and equipment is the most significant tax for most producers.
Recent changes for 2025 and 2026
- Corporate and personal top rates cut to 4.55% for 2026 and 3.99% for 2027.
- Property tax relief measures and increased refundable credits.
- Minimum wage reached $15 in 2026.
- Paid sick leave requirements in effect.
Is Nebraska a good state for business?
Advantages
- Falling corporate and personal income tax rates
- Refundable property tax credits
- Exemptions for manufacturing machinery and agricultural inputs
- Low cost of living and strong agricultural economy
Drawbacks
- High property taxes
- Newspaper publication requirement for new entities
- Neighbors with no income tax
- Small labor market outside Omaha and Lincoln
Compliance checklist
- File a Certificate of Organization or Articles of Incorporation with the Secretary of State.
- Publish notice of formation for three consecutive weeks and file proof.
- Register with the Department of Revenue for sales tax, withholding and income tax.
- Register with the Department of Labor for unemployment insurance if you hire.
- File biennial reports in odd-numbered years.
- File Form 1120N, 1120-SN or 1065N each year.
Compare Nebraska with its neighbors below or estimate your taxes in the United States calculator. See Corporation taxes for more.