Nebraska Income Tax Rates & Brackets (Tax Year 2025 — Filed in 2026)

Remote Workers and Multi-State Taxation

Living in Nebraska, Working for Out-of-State Employer

As a Nebraska resident, you owe Nebraska income tax on ALL income from all sources, regardless of where your employer is located or where your work is performed.

What this means:

• Employer location does NOT determine Nebraska tax obligation
• Income earned remotely for employers in California, Texas, New York, or any other state is fully taxable in Nebraska
• Nebraska law requires proper Nebraska tax withholding for resident employees

Example: A Nebraska resident working remotely from their home in Omaha for a California-based technology company owes Nebraska income tax on 100% of that income.

What to do: Notify your employer to withhold Nebraska income tax from your pay. If your employer withholds for another state, you will need to file both a Nebraska resident return (all income) and a nonresident return in the other state, then claim a credit on your Nebraska return for taxes paid to the other state.

Source: https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf

Working in Nebraska, Living in Another State

Non-residents who physically perform work IN Nebraska owe Nebraska income tax on income earned from Nebraska sources.

Physical Presence Rule: Income is generally sourced to Nebraska based on where work is physically performed. Days worked in Nebraska relative to total workdays are used to allocate multi-state wages.

Form 9N — Nebraska Nonresident Employee Certificate: Non-residents working in both Nebraska and other states for a Nebraska employer should file Form 9N with their employer to designate the percentage of wages subject to Nebraska withholding.

Source: https://revenue.nebraska.gov/sites/default/files/doc/business/Cir_En_2025/2026cir_en_whole.pdf

⚠️ Interstate Tax Risk Indicator

Remote workers involving Nebraska commonly encounter dual taxation complications with specific states:

Working with these states requires careful planning:

• New York — Applies the convenience of employer rule; if your employer is based in New York, NY may tax your income even when working from Nebraska
• California — Aggressive residency audits for former residents who move to Nebraska; extended periods of work in CA can create CA tax obligations
• Connecticut — Has a retaliatory convenience rule (applies if your home state has a convenience rule — Nebraska does)
• Delaware — Has its own convenience rule; Delaware-based employers can subject remote workers to DE tax
• Pennsylvania — Has a convenience rule; PA-based employers can source wages to PA even when you work from Nebraska; also has 3,800+ local income tax jurisdictions

Source: https://taxfoundation.org/research/all/state/state-income-taxes-nonresidents/ and Neb. Rev. Stat. § 77-2733

⚠️ Nebraska’s “Convenience of the Employer” Rule

Nebraska applies a “convenience of the employer” rule. This is one of the most important and least-understood aspects of Nebraska income tax for remote workers.

What it means:

Under Neb. Rev. Stat. § 77-2733(8)(c), when a non-resident works remotely for a Nebraska-based employer, and the remote work is performed outside Nebraska for the employee’s own convenience (rather than a business necessity), Nebraska may treat that out-of-state income as Nebraska-source income.

Specifically: If a non-resident employee works from home in another state and the services could have been performed within Nebraska (at the employer’s Nebraska office), Nebraska may source those wages to Nebraska — making them subject to Nebraska income tax even though the employee never set foot in Nebraska.

Practical example:
A Kansas resident works remotely from their Kansas home for an Omaha, Nebraska company. They physically work in Nebraska 0 days per year. Under Nebraska’s convenience rule, Nebraska treats those Kansas-earned wages as Nebraska-source income, because the work could have been performed at the Omaha office. The Kansas resident would owe Nebraska income tax on those wages.

Key statutory provision (Neb. Rev. Stat. § 77-2733(8)(c)):
Compensation is Nebraska-source income if it is paid for performing services outside Nebraska that are “directly related to a business, trade, or profession carried on within Nebraska for the nonresident’s convenience, and except for the nonresident’s convenience, the services could have been performed within Nebraska.”

Important exception — 7-day rule (LB 1023, 2024, effective Tax Year 2025):
For taxable years beginning on or after January 1, 2025, if a nonresident employee works more than 7 employment duty days in Nebraska, only the compensation paid for services physically performed within Nebraska (not the convenience rule wages) constitutes Nebraska-source income. This new rule provides some relief for high-volume Nebraska commuters.

Conference/training exception:
Wages paid for attending a conference or training in Nebraska are NOT subject to Nebraska income tax withholding if the nonresident: (a) works in more than one state, (b) is present and working in Nebraska 7 employment duty days or less during the year, AND (c) earns $5,000 or less in wages for work performed while physically present in Nebraska.

For affected non-residents: Consult a tax professional to determine whether Nebraska’s convenience rule applies to your specific employment situation. The interaction between Nebraska’s rule and your home state’s credit for taxes paid to other states is complex.

Source: Neb. Rev. Stat. § 77-2733(8)(c) — https://www.nebraskalegislature.gov/laws/statutes.php?statute=77-2733
Source: https://revenue.nebraska.gov/about/2024-nebraska-legislative-changes (LB 1023, 2024)
Source: https://revenue.nebraska.gov/sites/default/files/doc/business/Cir_En_2025/2026cir_en_whole.pdf

Reciprocal Agreements

Nebraska has NO reciprocal tax agreements with any other state.

This means Nebraska residents who work in other states must generally:

1. File a resident Nebraska return reporting all income (worldwide)
2. File a nonresident return in the other state reporting income earned there
3. Claim a credit on their Nebraska return for income taxes actually paid to the other state (Credit for Tax Paid to Another State, Nebraska Schedule I)

Similarly, residents of other states who work in Nebraska must file a Nebraska nonresident return for their Nebraska-source income — there is no automatic exemption from Nebraska tax based on residency in a neighboring state.

Notable Nebraska border situation: Iowa and Nebraska do not have a reciprocal agreement. An Iowa resident who commutes to Omaha or any Nebraska city for work must file both an Iowa resident return AND a Nebraska nonresident return, then claim Iowa’s credit for Nebraska taxes paid.

Source: https://taxfoundation.org/research/all/state/state-reciprocity-agreements/ (confirmed Nebraska not among reciprocal agreement states)
Source: https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf

Multi-State Tax Filing

When earning income in multiple states as a Nebraska resident:

1. File a Nebraska resident return (Form 1040N) reporting all income from all sources
2. File nonresident returns in other states where income was earned (follow each state’s rules)
3. Claim a Credit for Tax Paid to Another State on your Nebraska return for taxes actually paid to other states

Forms required:

• Form 1040N — Nebraska Individual Income Tax Return (resident return)
• Nebraska Schedule I, Part A — Credit for Tax Paid to Another State
• Each other state’s nonresident income tax return (varies by state)
• Form 9N — Nebraska Nonresident Employee Certificate for Allocation of Income Tax Withholding (if applicable, filed with employer)

Source: https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf

Local Income Taxes

Nebraska does not permit local income taxes. No city, county, or municipality in Nebraska may impose an income tax. Only the state-level Nebraska income tax applies. This is a significant simplification compared to states like Pennsylvania, Ohio, or Kentucky where local income taxes are common.