Nebraska 2026 Tax Changes — What Residents & Business Owners Must Know
On January 1, 2026, major federal tax changes take effect as TCJA provisions expire and updated federal rules continue.
- W-2 earners in Omaha, Lincoln, Bellevue, Grand Island, Kearney
- Agricultural and rural households
- Small business owners, LLCs, freelancers, and S-Corp operators
- Teachers, healthcare workers, and state employees
- Real estate investors, landlords, and STR hosts
- Families with children
- Retirees drawing taxable retirement income
- Dual-income households
Below is the full breakdown of how 2026 affects Nebraska taxpayers.
Key Federal Changes Affecting Nebraska Residents
Standard Deduction Shrinks in 2026
Many Nebraska residents will see higher taxable income — especially:
- families with dependents
- homeowners
- middle-income households
- retirees who rely on taxable distributions
Since Nebraska uses federal AGI, lower deductions increase state taxable income as well.
Federal Tax Brackets Increase
- dual-income families
- teachers, nurses, and public sector employees
- manufacturing and agricultural workers
- professionals in Omaha and Lincoln
- households earning $55K–$220K
Higher federal taxable income increases Nebraska’s state tax base.
QBI (20% Business Deduction) Remains Federal; Nebraska Does Not Apply It
QBI remains federal-only.
Nebraska does not apply the 20% deduction to state taxes.
- Federal taxable income may decrease
- Nebraska state taxable income does not
- Business owners must plan around both systems
This affects:
- contractors and construction trades
- real estate agents
- consultants and service providers
- small LLCs and S-Corps
- agricultural businesses and side operations
- self-employed professionals
Child Tax Credit Shrinks
- The federal Child Tax Credit reduces from around $2,000
- To roughly $1,000 per child
- Refundability decreases
Families across Omaha, Lincoln, Grand Island, and rural Nebraska will see smaller refunds.
Marriage Penalty Returns
- Married couples will reach higher brackets faster
- Credits phase out sooner
- Combined income increases federal and state taxable income
Couples earning between $70K–$180K are most affected.
Nebraska-Specific Tax Considerations
1. Nebraska Uses Federal AGI to Calculate State Income Tax
- reduced deductions
- higher taxable income
- lower credits
…all increase Nebraska state taxable income.
Taxpayers at all income levels will feel the combined effect.
2. Real Estate Investors & Rental Owners Will See Important Changes
Nebraska real estate markets — such as:
- Omaha
- Lincoln
- Bellevue
- Grand Island
- Kearney
— will be impacted by:
- capital gains increases
- shrinking depreciation benefits
- rental activity classification changes
- STR participation requirements
- timing considerations for selling or refinancing
Investors should prepare for reduced federal tax benefits.
3. Short-Term Rental (STR) Owners Must Prepare for Updated Rules
- Omaha (sports, concerts, tourism)
- Lincoln (university events)
- State park regions
- Larger towns with limited hotel inventory
- lower bonus depreciation
- stricter STR participation documentation
- IRS safe harbor changes
- limits on using STR losses
4. Agriculture & Rural Households Will Feel the Federal Shift
- farming
- cattle operations
- grain and crop sales
- ranching
- agricultural services
- depreciation for equipment
- treatment of livestock and crop income
- land sale gains
- operating losses and income averaging
- timing of farm-related purchases
Agricultural households must carefully time decisions around the 2026 transition.
5. Retirement Income Planning Still Centered on Federal Rules
Nebraska taxes many forms of retirement income, depending on age and income level.
Federal changes impact:
- IRA withdrawals
- 401(k) distributions
- pension income
- investment withdrawals
Higher federal brackets raise total tax liability even if Nebraska exempts some retirement income.
Who Is Hit Hardest in Nebraska (2026)
- Dual-income households
- Manufacturing, trades, and agricultural workers
- Business owners and freelancers
- Real estate investors and landlords
- STR operators
- Farmers and ranching households
- Families with children
- Retirees drawing taxable retirement income
- Middle-income earners
What Nebraska Residents Should Do Before December 31, 2025
- Adjust federal and state withholding
- Maximize retirement contributions
- Consider Roth conversions
- Review business entity structure (LLC vs S-Corp)
- Prepare STR participation documentation
- Assess capital gains exposure
- Time equipment or property purchases strategically
- Build a multi-year federal + Nebraska tax strategy
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 a 2026 Nebraska Tax Strategy
Nebraska residents face meaningful 2026 changes due to reduced deductions, higher brackets, shrinking credits, and updated rules impacting business owners, farmers, families, retirees, and property owners.
A personalized tax plan ensures you’re fully prepared before the new rules take effect.