Does Nebraska Tax Social Security
Short answer:
As of tax year 2025, Nebraska fully exempts all Social Security benefits from state income tax. No income thresholds, no phase-outs. Federal taxes may still apply based on your total income.
Nebraska finished a multi-year phase-out of its Social Security tax with the passage of LB 873. Starting with tax year 2025, the exemption is 100 percent. That means no Nebraska state income tax on Social Security benefits, period, regardless of how much you earn or how much of your benefit is taxable at the federal level.
The IRS still uses its own combined income formula to determine whether up to 85 percent of your Social Security is taxable on your federal return. Nebraska now steps completely out of that calculation. You may still owe federal tax on part of your benefit, but Nebraska will not add a state tax on top of it.
Why this matters
Your take-home income in Nebraska is now higher than it was in prior years under the older partial-exemption rules. If you or a client filed Nebraska returns in 2022, 2023, or 2024, those years had partial exemptions of 40, 60, and 80 percent. The full exemption starting in 2025 is the final step, and it is permanent.
Good to know
Tax rules can change. Always verify current Nebraska guidance at revenue.nebraska.gov. Federal Social Security taxation rules remain in effect regardless of the Nebraska exemption.
Sources
Nebraska Department of Revenue (revenue.nebraska.gov), Social Security Administration (ssa.gov), Internal Revenue Service (irs.gov)
Are you ready to book a quick 15-minute, no-pitch call to sketch your Lifestyle-First Retirement Income Blueprint?
We'll focus on your essentials and non-negotiable adventures, experiences, and memories with loved ones and how Protected Lifetime Income (PLI) can give you a license to spend without relying on Monte Carlo "probabilities" or 1990s withdrawal rules.
Book your call: https://tidycal.com/kurt3/retirement-income-blueprint-call
Educational only. Not tax, legal, or individualized investment advice.
See all Retirement Income Answers: https://www.maxmyretirementincome.com/retirement-income-answers.html
As of tax year 2025, Nebraska fully exempts all Social Security benefits from state income tax. No income thresholds, no phase-outs. Federal taxes may still apply based on your total income.
Nebraska finished a multi-year phase-out of its Social Security tax with the passage of LB 873. Starting with tax year 2025, the exemption is 100 percent. That means no Nebraska state income tax on Social Security benefits, period, regardless of how much you earn or how much of your benefit is taxable at the federal level.
The IRS still uses its own combined income formula to determine whether up to 85 percent of your Social Security is taxable on your federal return. Nebraska now steps completely out of that calculation. You may still owe federal tax on part of your benefit, but Nebraska will not add a state tax on top of it.
Why this matters
Your take-home income in Nebraska is now higher than it was in prior years under the older partial-exemption rules. If you or a client filed Nebraska returns in 2022, 2023, or 2024, those years had partial exemptions of 40, 60, and 80 percent. The full exemption starting in 2025 is the final step, and it is permanent.
Good to know
Tax rules can change. Always verify current Nebraska guidance at revenue.nebraska.gov. Federal Social Security taxation rules remain in effect regardless of the Nebraska exemption.
Sources
Nebraska Department of Revenue (revenue.nebraska.gov), Social Security Administration (ssa.gov), Internal Revenue Service (irs.gov)
Are you ready to book a quick 15-minute, no-pitch call to sketch your Lifestyle-First Retirement Income Blueprint?
We'll focus on your essentials and non-negotiable adventures, experiences, and memories with loved ones and how Protected Lifetime Income (PLI) can give you a license to spend without relying on Monte Carlo "probabilities" or 1990s withdrawal rules.
Book your call: https://tidycal.com/kurt3/retirement-income-blueprint-call
Educational only. Not tax, legal, or individualized investment advice.
See all Retirement Income Answers: https://www.maxmyretirementincome.com/retirement-income-answers.html