BASIC PROVISIONS AND TAX BASE OF THE
NEBRASKA INDIVIDUAL, FIDUCIARY, AND
CORPORATION INCOME TAX, AND
FINANCIAL INSTITUTION TAX LAWS
Individual Income Tax*
Nebraska individual income tax is imposed for each taxable year on the entire income of every
resident individual. Nonresident and partial-year resident individuals are taxed on income derived
from Nebraska sources. For tax year 1998, the rates are 2.51, 3.49, 5.01, and 6.68 percent of
Nebraska taxable income. Brackets for each filing status are outlined in section 77-2715.02. A
personal exemption credit is allowed against the tax computed for every federal personal exemption
of the taxpayer. For 1998, the credit is $88.
The tax is calculated as a percentage of Nebraska taxable income. Additional taxes are computed
on alternative minimum tax and premature and lump-sum distributions from qualified retirement plans
at a rate equal to 29.6 percent of the federal tax amount. Nebraska taxable income starts with federal
adjusted gross income, adds interest from non-Nebraska state and local government obligations, and
subtracts U.S. government obligations and other adjustments decreasing income. A standard
deduction equal to the federal amount or federal itemized deductions less state and local income tax
is allowed as a deduction. These deductions, together with the personal exemption credit, are reduced
for higher income taxpayers. An additional tax which phases out the benefit of lower tax rates in the
first income brackets is also computed by higher income taxpayers.
Fiduciary Income Tax*
Nebraska income tax is imposed for each taxable year on the adjusted federal taxable income of
a resident estate or trust. Nonresident estates and trusts have the Nebraska income tax imposed for
each taxable year on the portion of their income derived from sources within Nebraska.
In both cases, the tax is calculated as a percentage of Nebraska taxable income. The rates are
2.51, 3.49, 5.01, and 6.68 percent. The brackets are established in section 77-2715.02.