Does Nebraska tax Social Security benefits?

No. Nebraska fully exempts Social Security benefits from state income tax beginning with tax year 2024 after an accelerated phase-out. The calculator treats Social Security as $0 of Nebraska taxable income.

Are pensions and 401(k) withdrawals taxed in Nebraska?

Yes. Nebraska has no general exclusion for private pensions or IRA and 401(k) distributions, so they are taxed as ordinary income at the graduated rates topping out at 5.84%. Only specific income types, like Social Security and military pay, receive special treatment.

Is military retirement pay taxed in Nebraska?

No, if you make the election. Nebraska allows a 100% exclusion of military retirement benefit pay from state income tax. The calculator applies this exclusion when the military retirement box is checked.

What is Nebraska's top income tax rate?

For tax year 2024 the top marginal Nebraska income tax rate is 5.84%, with lower brackets of 2.46%, 3.51%, and 5.01%. The state has been gradually reducing its top rate in later years, so confirm the current figure.

Is Nebraska a tax-friendly state for retirees?

It has become friendlier. With Social Security fully exempt and military pay excludable, Social-Security-heavy retirees can owe little Nebraska tax. Those drawing large pensions or 401(k) withdrawals still face ordinary income tax, so the answer depends on your income mix.

Nebraska Retirement Income Tax Calculator

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Nebraska’s tax picture for retirees changed sharply in 2024, when Social Security became fully exempt from state income tax. This calculator separates your retirement income into exempt and taxable buckets so you can see what Nebraska actually taxes.

How it works

The tool splits your retirement income by how Nebraska treats each source. Social Security is fully exempt as of tax year 2024, and military retirement pay is excludable by election. Everything else — private pensions, IRA and 401(k) withdrawals, and other taxable income — is taxed as ordinary income.

Nebraska taxable = pension + IRA/401(k) + other income − standard deduction
state tax = graduated brackets (2.46% / 3.51% / 5.01% / 5.84%)

The calculator subtracts the Nebraska standard deduction, then applies the graduated brackets to the remaining taxable retirement income.

Example

A married couple receives 24,000 dollars of Social Security (exempt), an 18,000 dollar pension, and 20,000 dollars of 401(k) withdrawals. The 38,000 dollars of taxable retirement income, less the joint standard deduction, leaves a modest Nebraska taxable amount taxed mostly in the lower brackets, so the state bill is only a few hundred dollars.

Notes

This estimate omits federal income tax, Nebraska personal-exemption credits, and itemized deductions, and it assumes the standard deduction. Rules and rates change year to year, so confirm Social Security treatment, the military exclusion, and current brackets at revenue.nebraska.gov before filing.