Mostly taxed
How Nebraska taxes retirement income
Nebraska stopped taxing Social Security benefits entirely starting with 2024 returns, after several years of phasing the tax out. Military retirement pay is also fully excluded.
Other retirement income is taxed. That includes Nebraska School Employees Retirement System pensions, state and county plans, pensions from other states and companies, and withdrawals from 401(k), 403(b), 457(b) and IRA accounts. Retirees under the old federal Civil Service Retirement System can subtract part of their annuity.
Nebraska has been cutting its top income tax rate each year under a 2023 law, with the top rate set to fall to 3.99% by 2027. Property taxes are relatively high, and the state offers a homestead exemption for homeowners 65 and older with limited income.
Questions
Does Nebraska tax Social Security?
No. Social Security has been fully exempt since tax year 2024.
Does Nebraska tax teacher pensions?
Yes. School Employees Retirement System pensions are taxed like other pension income.
Is military retirement taxed?
No. Military retirement pay is fully excluded.