Does Nebraska Tax Retirement Income?

No. Nebraska does not tax Social Security benefits.

Social Security benefits are 100% exempt beginning with tax year 2024. Any amount included in federal AGI is subtracted on Nebraska Schedule I with no income limit.

The Nebraska answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Nebraska does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Nebraska sits among the states that still tax benefits.

Yes. Nebraska generally taxes pension income.

Public and private pensions are taxable at the regular rates. Nebraska does not offer a pension exclusion or age-based subtraction.

The exclusion that matters is the Social Security subtraction; nothing else is carved out. The 2026 rate schedule has three brackets, 2.46%, 3.51%, and 4.55%, with the top rate reached at roughly $24,760 of taxable income for a single filer, so most retirement income is taxed near the top rate.

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Yes. Nebraska generally taxes traditional 401(k) and IRA withdrawals.

Traditional 401(k) and IRA withdrawals are fully taxable when included in federal AGI.

Two timing points matter in Nebraska. A Roth conversion is taxable in the year it is done, and Nebraska starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Nebraska rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A single 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension subtracts all $25,500 of federally taxable Social Security and reports $60,000 of Nebraska income. After the standard deduction, Nebraska tax is roughly $2,000.

Start with federal AGI of about $85,500, subtract the $25,500 of taxable Social Security, and Nebraska AGI is $60,000. After a Nebraska standard deduction of roughly $9,000 for a single filer age 65 or older, taxable income is about $51,000. The first roughly $4,100 is taxed at 2.46%, the next roughly $20,600 at 3.51%, and the remaining $26,000 or so at 4.55%, for a total of roughly $2,000. Contrast: a $150,000 lump-sum IRA withdrawal is taxed entirely at 4.55%, adding roughly $6,800; spreading it over 2027 and later years captures the 3.99% rate instead, which is worth about $840 on the same $150,000.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Iowa: treats Social Security as exempt, pensions as exempt at 55+, and 401(k) and IRA withdrawals as exempt at 55+, with a top rate of 3.80% and qualifying retirement income exclusion at age 55+.
• Kansas: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as taxed, with a top rate of 5.58% and kansas public pensions are generally exempt.
• South Dakota: has no individual income tax at all.

The Social Security exemption is new enough that people assume Nebraska went retiree-friendly across the board. It did not; pensions and IRAs are taxed at nearly the top rate, and the inheritance tax reaches children on anything above $100,000 each.

Military retirement: Military retirement benefits are 100% excluded for tax years beginning on or after January 1, 2022, to the extent included in federal AGI. No election or separate form is required. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Nebraska has no estate tax, but it is one of the few states with a county-level inheritance tax. Surviving spouses are exempt; children, parents, grandchildren, and siblings pay 1% on amounts above $100,000 per beneficiary; more distant relatives and unrelated heirs face higher rates on smaller exemptions.

Selling a home or investments in Nebraska: retirement-income rules do not cover capital gains. See Nebraska capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. The exclusion that matters is the Social Security subtraction; nothing else is carved out. The 2026 rate schedule has three brackets, 2.46%, 3.51%, and 4.55%, with the top rate reached at roughly $24,760 of taxable income for a single filer, so most retirement income is taxed near the top rate.
• Part-year residents. If you moved into or out of Nebraska during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Nebraska tax. If Nebraska taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. Sequence large IRA withdrawals and Roth conversions into 2027 or later when the rate settles at 3.99%. A conversion done in 2026 instead of 2027 costs an extra 0.56 percentage points on every dollar converted.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.