Nebraska Cuts Its Top Income Tax Rate to 4.55% for 2026
The third and fourth income tax brackets now share a 4.55% rate, while the two lower rates remain unchanged.
Nebraska's top individual income tax rate falls from 5.20% to 4.55% for the 2026 tax year. The change also reduces the third-bracket rate from 5.01% to 4.55%, leaving three distinct rates across the state's four statutory brackets.
The reductions took effect January 1 under Legislative Bill 754, signed by Governor Jim Pillen on May 31, 2023. The governor highlighted the approaching cuts in a December 29 reminder. The Nebraska Department of Revenue (DOR) includes both lower rates in its 2026 estimated income tax schedule.
Both Upper Brackets Now Use the Same Rate
The table below compares the rate for each Nebraska income tax bracket in 2025 and 2026. The first two rates remain 2.46% and 3.51%. The reductions apply to the third and fourth brackets.
| Tax Bracket | 2025 | 2026 |
|---|---|---|
| First | 2.46% | 2.46% |
| Second | 3.51% | 3.51% |
| Third | 5.01% | 4.55% |
| Fourth | 5.20% | 4.55% |
The income thresholds also rise with annual inflation adjustments. For a single filer in 2026, the first $4,130 of taxable income is taxed at 2.46%, and the portion over $4,130 through $24,760 is taxed at 3.51%. Income above $24,760 is taxed at 4.55%, even though the official schedule continues to list separate third and fourth brackets.
For married couples filing jointly, the 4.55% rate applies to taxable income above $49,530. Reaching that bracket does not cause the income in the two lower brackets to be taxed at the higher rate.
How Much Do the Changes Save?
The following examples show how the lower rates and indexed thresholds work together for single filers at two income levels. They hold Nebraska taxable income constant and exclude credits, including the personal exemption credit. Dollar amounts are rounded to the nearest dollar. Savings percentages use the tax amounts before rounding.
| Taxable Income | 2025 | 2026 | Savings | Savings % |
|---|---|---|---|---|
| $80,000 | $3,682 | $3,339 | $343 | 9.3% |
| $160,000 | $7,842 | $6,979 | $863 | 11.0% |
At $80,000 of taxable income, the new schedule saves about $343, or 9.3% of the prior year's tax before credits. At $160,000, the savings increase to about $863, or 11.0%. The percentage reduction is larger in the second example because a greater share of income was taxed at the previous 5.20% top rate.
These examples use the DOR's published estimated income tax schedules for each year. They compare taxable income after applicable deductions and Nebraska adjustments, not gross salary. Changes in a taxpayer's income, deductions, or credits can make actual year-to-year savings different.
Which Tax Year Uses the New Rates?
The 4.55% rate applies to the 2026 tax year, with calendar-year returns generally filed in 2027. Taxpayers planning estimated payments can use the Nebraska Department of Revenue's 2026 Form 1040N-ES worksheet and rate schedule. That schedule is for estimating payments. Use the applicable return instructions and tax tables when preparing the annual return.
Under the same law, both upper-bracket rates are scheduled to fall again to 3.99% for the 2027 tax year. The two lower rates remain 2.46% and 3.51%.
Our Nebraska income tax calculator page provides the current brackets and worked examples. For available Form 1040N returns and instructions, visit our Nebraska income tax forms page and select the edition for the tax year you are filing.
References:
- Nebraska Revised Statute 77-2715.03: Individual Income Tax Brackets and Rates. Subsections (2)-(3), as amended by LB 754, Section 7. Rate reductions for 2026 and 2027 and annual bracket indexing. Nebraska Legislature. Retrieved September 24, 2026.
- LB 754 Actions, 2023 Session. Governor's approval on May 31, 2023. Nebraska Legislature. Retrieved September 24, 2026.
- Gov. Pillen's Historic Income Tax Cuts Effective in January. December 29, 2025. Reminder of the January 2026 reduction and scheduled 2027 rate. Office of Governor Jim Pillen. Retrieved September 24, 2026.
- 2025 Nebraska Individual Estimated Income Tax Payment Vouchers, Form 1040N-ES. Revised October 2024. Page 6, 2025 estimated income tax rate schedule used for the comparison. Nebraska Department of Revenue. Retrieved September 24, 2026.
- 2026 Nebraska Individual Estimated Income Tax Payment Vouchers, Form 1040N-ES. Revised November 2025. Page 6, 2026 estimated income tax rate schedule and note on matching third- and fourth-bracket rates. Nebraska Department of Revenue. Retrieved September 24, 2026.