Nebraska 2026 Tax Changes — What the One Big Beautiful Bill Act (OBBBA ) and State Tax Cuts Mean for Residents
On January 1, 2026, the tax landscape for Nebraskans will undergo a historic and positive transformation. At the federal level, the One Big Beautiful Bill Act (OBBBA) has made the popular 2017 TCJA tax cuts permanent and introduced new benefits, avoiding the feared “tax cliff.”
This guide provides a clear, localized breakdown of how these permanent federal and state tax laws will impact your income, business, and financial strategy in 2026 and beyond.
The Double Win: Federal and State Tax Cuts
Permanent Federal Relief from OBBBA
OBBBA has made the federal tax picture much brighter for all Americans, including Nebraskans.
- Lower Federal Tax Brackets are PERMANENT: The lower individual income tax rates from the TCJA are here to stay. This is a crucial win for Nebraska’s working families, agricultural workers, and professionals in Omaha and Lincoln.
- The Federal Standard Deduction is PERMANENT: The higher federal standard deduction is also permanent, simplifying filing and lowering federal taxable income for the majority of households.
- The QBI Deduction is PERMANENT and ENHANCED (Federal Level): The 20% Qualified Business Income (QBI) Deduction is a permanent part of the federal tax code. While Nebraska does not have a state-level QBI, this remains a massive federal benefit for the state's many small businesses, contractors, and agricultural operations.
Nebraska’s New, Lower Flat Tax
This is the biggest state-level tax change in a generation. Nebraska is in the process of dramatically cutting its income tax, with the goal of a single, competitive 3.99% flat income tax rate by 2027.
👉 Nebraska Impact: This is a monumental win. It simplifies the state tax code and provides significant, permanent tax relief. When combined with the permanent federal cuts, it means Nebraskans will keep more of their hard-earned money at both the state and federal level.
New Federal Tax Breaks for Nebraska Residents
- Overtime Deduction: Deduct up to $12,500 ($25,000 for joint filers) of qualified overtime pay—a great benefit for workers in Nebraska’s manufacturing, logistics, and food processing industries.
- Senior Deduction:An additional $6,000 deduction for individuals 65 and older (subject to phase-out).
- Auto Loan Interest Deduction:Deduct up to $10,000 in interest on new personal vehicle loans from 2025-2028.
Nebraska-Specific Tax Considerations for 2026
A Major Win for Agriculture
Favorable Treatment of Social Security
👉 Nebraska Impact: The combination of permanent lower federal tax rates under OBBBA and Nebraska’s zero-tax policy on Social Security makes the state an even more attractive destination for retirees.
Real Estate and STRs
For property owners in growing markets like Omaha and Lincoln, OBBBA brings welcome news. The 100% bonus depreciation for qualified property is now permanent. This allows real estate investors and STR hosts to immediately write off the cost of certain assets on their federal return, making strategies like cost segregation incredibly powerful.
What Nebraska Taxpayers Should Do Now
- Update Your Tax Plan: Your old strategy is obsolete. It’s time to build a new plan based on the dual benefits of permanent federal cuts and Nebraska's new lower tax rates.
- Integrate Federal and State Planning: Work with a professional who understands how to maximize permanent federal benefits while leveraging Nebraska’s unique state tax advantages.
- Maximize the Federal QBI Deduction: If you own a farm, ranch, or small business, ensure your structure is optimized to claim the full 20% federal QBI deduction.
- Retirees, Take Note: If you are considering retirement, understand that Nebraska offers excellent tax benefits for retirees, now supercharged by lower federal rates.
Nebraska 2026 Tax FAQ
Does Nebraska conform to QBI?
No — QBI is federal-only.
Will Nebraska taxes rise?
Rates do not change, but taxable income rises due to federal changes.
Are families affected?
Yes — reduced credits and higher taxable income lower refunds.
Are STR owners impacted?
Yes — depreciation and participation rules tighten.
Are retirees affected?
Yes — federal bracket changes raise tax cost on withdrawals.
Get Your Personalized 2026 Nebraska Tax Plan
The tax landscape has permanently shifted in your favor. Don’t operate on outdated assumptions. A personalized strategy session will ensure you are structured to maximize every new and permanent benefit under OBBBA and Nebraska’s new, lower state tax rates.
Because tax situations vary by individual and business, many Nebraska residents choose to work with a qualified tax professional. You can explore available Nebraska tax services here: