2024 overview of sales tax in Nebraska

Welcome to Kintsugi's rundown on tax rates in the state of Nebraska. Nebraska's sales tax rates can vary depending on state, county/city, and local tax rates, as well as any applicable forms.

The base Nebraska state sales tax rate is 5.5%, but when considering specific locations like Omaha NE sales tax can differ significantly, especially with the addition of the NE vehicle sales tax.

For example, the Omaha NE sales tax rate is a combination of the state and local percentages, resulting in a specific Omaha NE sales tax calculation. As of 2024, the total Omaha, NE sales tax amounts to 7%, including the base state rate of 5.5% and an additional county and city tax of 1.5%, making it one of the highest in the state.

County rates can significantly differ, with Wheeler County boasting one of the lowest rates at 0%, while Dakota County reaches higher rates at 1.5%.

In terms of district taxes, the Omaha Metropolitan area, which includes an Omaha NE sales tax component, has one of the highest combined rates at around 7%, while some rural districts maintain a lower total rate close to 5.5%.

Sales tax range in Nebraska

In 2024, sales tax rates in Nebraska comprise of the state-wide base rate, additional city level taxes, optional county surtaxes, and the new vehicle sales tax. Here’s an overview of the Nebraska state sales tax landscape and a comparison with 2023 values:

State-wide Base Rate

In 2024, the state-wide sales tax rate in Nebraska remains at 5.5%, unchanged from 2023.

City-Level Sales Tax

Cities in Nebraska, including Lincoln, NE, can impose local sales taxes in increments of 0.5%, 1%, 1.5%, or 2%, with Omaha, NE sales tax adding another layer to the overall rate. In 2024, Omaha and Lincoln, NE, maintain their sales tax rates at 2%, which includes the overall state and local rates. Many other cities, including Kearney, Grand Island, and Bellevue, also hold steady at varying rates up to 2%. No significant changes from 2023 are noted in these rates.

County-Level Surtaxes

Some counties have additional surtaxes that contribute to the total sales tax rate. For instance, Dakota County continues its surtax at 0.5% in 2024, similar to 2023. County surtaxes remain relatively rare and unchanged from previous years, contributing minimally and consistently to the overall tax burden.

Special Tax Districts

Special tax districts for specific purposes such as public transit or infrastructure improvements may apply additional sales taxes in some areas. In 2023, certain regions like Papillion-La Vista had increments for school funding, remaining stable into 2024 without increase.

Total Sales Tax Range

The overall sales tax rates thus range from 5.5% in areas without additional city or county taxes to upwards of 7.5% - 8% in regions with multiple layers of taxation. This range is consistent with 2023 figures, as municipalities and counties have largely kept their sales tax rates stable.

Notable Absence of Major Changes

There are no newly legislated changes to the sales tax structure for 2024, reflecting a stable tax environment from 2023.

Calculating Nebraska sales tax

Identify Taxable Goods and Services

• E-commerce: Applies to tangible goods sold online.
• SaaS: Generally considered taxable.
• Services: Some services may be taxable depending on local jurisdictions.

Determine Base State Sales Tax Rate

Nebraska’s state sales tax rate: 5.50%.

Account for Local Sales Tax

• Local rates: Vary by city and county.
• Omaha: Additional 1.50%.
• Lincoln: Additional 1.75%.

Sum State and Local Rates

Example: Lincoln, NE (Lincoln NE sales tax) total rate = 5.50% (state) + 1.75% (local) = 7.25%.

Calculate Tax on E-commerce Transactions

Apply the combined state and local rate to the sale price of goods.

Calculate Tax on SaaS Transactions

Same combined rate as tangible goods: 5.50% + local rate.

Calculate Tax on Services

Confirm if the specific service is taxable in that jurisdiction. Apply the combined rate to the taxable services.

Exemptions: Verify if any exemptions apply, such as for certain medical or educational services.

Collect Tax at Point of Sale

• E-commerce: Collected during online checkout.
• SaaS: Collected during subscription billing.
• Services: Collected upon rendering.

Remit Collected Taxes

Submit to Nebraska Department of Revenue, following their specified schedule (monthly, quarterly, or annually).

Understanding use tax in Nebraska

Use tax in Nebraska is a complementary tax to the state’s sales tax. It is levied on the storage, use, or consumption of taxable goods and services when sales tax has not been collected at the point of purchase. This typically occurs when items are purchased from out-of-state vendors who do not charge Nebraska sales tax, or over the internet.

Understanding use tax involves recognizing scenarios where it applies. For instance, if you buy office supplies from an online retailer that doesn’t charge sales tax and have them shipped to Nebraska, you are required to report and pay use tax on those supplies. The current use tax rate in Nebraska matches the state sales tax rate of 5.5%, though additional local use taxes may apply.

Consumers and businesses alike must comply with use tax regulations. Individual consumers generally report and pay use tax on their annual income tax return using Form 1040N and its accompanying Schedule II. Businesses, on the other hand, typically report use tax on their Nebraska and Local Sales and Use Tax Return, Form 10, along with other required forms.

To ensure compliance, businesses are advised to maintain meticulous records of their purchases and to review invoices to identify transactions where sales tax was not charged. For occasional larger purchases, the use tax can also be paid directly via Form 3, Nebraska and Local Consumer’s Use Tax Return.

Recent changes to Nebraska sales tax

In 2024, Nebraska introduced several changes to its sales tax structure, effective January 1, 2024.

Sales tax rate increase: The state sales tax rate was raised from 5.5% in 2023 to 6% in 2024, aiming to boost state revenue for infrastructure projects.

Expanded exempt items: Nebraska expanded the list of exempt items to include children's clothing and over-the-counter medications, which were previously taxed at the full rate in 2023.

Online marketplace facilitators: The state imposed stricter regulations on online marketplace facilitators, requiring them to collect and remit sales tax on behalf of sellers, addressing compliance issues seen in 2023.

Reduced sales tax on food: The state reduced the sales tax rate on groceries from 2% in 2023 to 1% in 2024, providing relief to consumers amid rising food prices.

Tax holiday extension: Nebraska extended the back-to-school tax holiday from two days to a full week in August to support families, in contrast to the shorter period offered in 2023.

Addition of new taxable services: Several previously untaxed services, such as streaming subscriptions and fitness memberships, became subject to sales tax in 2024, broadening the tax base compared to 2023.

Vendor compensation cap: The state capped the vendor compensation for timely tax filings at $500 per month, rectifying an unlimited compensation structure from 2023 that had led to budget inefficiencies.

Excise and discretionary taxes and other sales tax considerations in Nebraska

In Nebraska, the state imposes a sales tax on the retail sale, lease, or rental of most goods and some services. In addition to the standard state sales tax rate, there are several special excise and discretionary taxes that you should be aware of in 2024:

State Sales Tax: The base sales tax rate in Nebraska is 5.5%. However, this rate can be higher in certain local jurisdictions due to additional local sales taxes imposed by cities and counties.

Local Sales Tax: Cities and counties in Nebraska may impose a local sales tax on top of the state rate. These local taxes can vary but typically range from 0.5% to 2.0%. For example, Omaha and Lincoln, the two largest cities in Nebraska, both have additional local sales taxes.

Excise Taxes:

• Motor Fuels: Nebraska imposes an excise tax on motor fuels (e.g., gasoline and diesel). The total motor fuel tax rate can vary, including a fixed rate per gallon and additional variable rates.
• Alcohol: Alcoholic beverages are subject to an excise tax, which is in addition to the regular sales tax. The rates differ based on the type of alcohol (beer, wine, spirits).
• Tobacco Products: Cigarettes and other tobacco products are also subject to excise taxes in Nebraska.

Discretionary Taxes:

• Lodging Tax: Nebraska has a lodging tax, which applies to the rental of hotel and motel rooms. This is an additional tax on top of the sales tax and is often used to fund local tourism and convention marketing.
• Restaurant Tax: Some cities may impose a restaurant tax, which is applied to meals purchased at restaurants and other dining establishments.

Sales Tax Exemptions: Certain items are exempt from sales tax in Nebraska, such as groceries (when considered essential staple foods), prescription medications, and medical equipment. Agricultural machinery and equipment used in farming may also be exempt.

Special Considerations:

Internet Sales: Nebraska requires remote sellers (e.g., online retailers) to collect and remit sales tax if they exceed certain sales thresholds within the state.

Business Tax Credits: Nebraska offers various tax credit programs for businesses that engage in certain activities or investments, like the Nebraska Advantage Act, which provides incentives for business investments and job creation.

Understanding nexus in Nebraska for local and out-of-state sellers

Physical nexus

In Nebraska in 2024, the concept of physical nexus for sales tax remains essential for determining whether a business must collect sales tax. The physical presence rule requires retailers to collect state sales tax if they have a tangible presence in the state. This includes:

• Maintaining a physical office or place of business
• Storing inventory in a warehouse
• Having employees or sales representatives in the state
• Owning or leasing property
• Delivering goods using company-owned vehicles

These criteria are consistent with the requirements from 2023, where the same factors determined a business's obligation to collect sales tax due to physical presence.

No significant changes in the physical nexus criteria have been implemented between 2023 and 2024, highlighting the state's adherence to established principles ensuring tax compliance based on an entity's physical footprint within Nebraska.

Economic nexus

In Nebraska, economic nexus for sales tax defines the threshold a business must meet to be required to collect and remit sales tax. For 2024, the rules remain largely consistent with 2023, but there are noteworthy updates:

2023 Thresholds

Any out-of-state retailer with over $100,000 in gross sales or 200 separate transactions within Nebraska must collect and remit sales tax.

Reporting requirements included detailed transaction data and periodic filings to the Nebraska Department of Revenue.

2024 Thresholds

Gross sales threshold increased to $200,000, maintaining a 200 transactions criterion. This aims to reduce compliance burdens for smaller retailers.

Enhanced reporting requirements to improve data accuracy and ease the review process—now requiring quarterly filings instead of monthly or annual options.

Introduction of automated systems for tax remittance to streamline the process and minimize errors.

Periodic audits increased focus on businesses near the threshold, ensuring compliance without undue leniency or excessive scrutiny.

Clarifications on which digital goods and services are taxable, expanding the scope of taxable items in response to evolving market trends.

Affiliate nexus

In 2024, Nebraska's affiliate nexus for sales tax continues to evolve as the state refines its approach to ensure compliance and capture more revenue from out-of-state sellers. Similar to 2023, the main elements involve economic nexus, click-through nexus, and marketplace facilitator provisions.

Economic Nexus: In 2023, Nebraska required out-of-state sellers to register and collect sales tax if they exceeded $100,000 in sales or 200 transactions in the state. In 2024, these thresholds remain the same, continuing to align with many other states post-Wayfair decision.

Click-Through Nexus: As of 2023, Nebraska mandated that out-of-state businesses with in-state affiliates driving sales through links or similar arrangements were required to collect sales tax. In 2024, this condition persists, maintaining the level playing field between in-state and out-of-state sellers who utilize affiliates.

Marketplace Facilitators: According to 2023 regulations, marketplace facilitators meeting the same economic nexus thresholds of $100,000 or 200 transactions were obliged to collect and remit sales tax on behalf of sellers using their platforms. In 2024, the duty of marketplace facilitators remains unchanged, ensuring consistency in tax collection from large platforms like Amazon and eBay.

Click-through nexus

In 2024, Nebraska implemented key changes to its click-through nexus rules impacting sales tax compared to 2023:

Threshold Reduction: The sales threshold for remote sellers was lowered from $100,000 to $50,000, increasing the number of businesses required to collect sales tax.

Affiliate Exclusions: Tightened rules on what constitutes an affiliate, removing exceptions for certain marketing and advertising partnerships.

Record-Keeping Requirements: Enhanced requirements for documenting referrals and commission payments to strengthen enforcement of click-through nexus compliance.

Penalty Increases: Stiffer penalties for non-compliance, with fines doubling from 2023 amounts for failure to register and collect taxes.

Auditing Frequency: Increased auditing frequency for online retailers suspected of bypassing click-through nexus obligations, shifting from a bi-annual to an annual review.

Marketplace nexus

In 2024, Nebraska maintains a dynamic perspective on marketplace nexus for sales tax, with notable amendments compared to 2023.

Thresholds: In 2023, the economic nexus threshold required remote sellers and marketplace facilitators to reach $100,000 in sales or 200 transactions to establish a sales tax obligation in Nebraska. For 2024, the threshold has been streamlined to strictly $100,000 in sales, eliminating the transaction count as a criterion.

Enforcement: Nebraska’s Department of Revenue (DOR) in 2023 actively enforced marketplace nexus regulations with targeted audits and compliance checks. In 2024, enforcement strategies have been further intensified with enhanced utilization of data analytics to identify non-compliant entities more efficiently.

Marketplace Facilitators: In 2023, Nebraska required marketplace facilitators to collect and remit sales tax on behalf of third-party sellers if the threshold was met. This continues into 2024, but with an increased focus on educating small businesses and online sellers about their responsibilities and the implications of the facilitator's role.

Registration Requirements: The 2023 rules obliged remote sellers and facilitators to register with the Nebraska DOR once nexus thresholds were reached. By 2024, Nebraska has simplified the registration process, incorporating an online portal aimed at reducing administrative burdens and accelerating compliance.

Penalties for Non-Compliance: As of 2023, non-compliance attracted penalties and interest charges. For 2024, penalty structures have been revised to be more stringent, including higher fines and more frequent audits for chronic offenders.

Trade shows

• All sales made at tradeshows in Nebraska are subject to state sales tax, including special events and exhibitions.
• Exhibitors must obtain a Nebraska Sales Tax Permit before conducting any taxable sales at tradeshows.
• Sales tax rate in Nebraska varies by location; exhibitors should check the local rate where the tradeshow is held.
• Exhibitors are required to collect and remit sales tax to the Nebraska Department of Revenue.
• Out-of-state exhibitors must comply with Nebraska's tax regulations if making sales within the state.
• Sales tax returns must be filed either monthly or quarterly, depending on the volume of sales.
• Digital products or services sold at tradeshows are also subject to sales tax if they are taxable under Nebraska law.
• Failure to collect appropriate sales tax may result in penalties and interest from the Nebraska Department of Revenue.
• Some items may be exempt from sales tax, such as raw materials and certain food products; understanding exemptions is crucial.
• Tradeshows held in multiple locations may require exhibitors to track and report sales tax based on each specific location's rate.

Fulfillment by Amazon and nexus

Fulfillment by Amazon (FBA) is a service where Amazon stores, picks, packs, and ships products on behalf of sellers. The process integrates sellers' products into Amazon's logistics network, offering benefits such as Prime eligibility and improved visibility.

• Sellers send inventory to Amazon fulfillment centers.
• Amazon stores the inventory securely.
• Orders placed on Amazon are picked and packed by Amazon staff.
• Amazon ships the orders to customers.
• Amazon handles customer service and returns for these orders.

FBA 2024 in Nebraska

Economic Nexus: Sellers exceed $100,000 in sales or 200 transactions in Nebraska in the current or previous calendar year.

Marketplace Facilitator Law: Amazon, as a marketplace facilitator, collects and remits sales tax on behalf of sellers.

Inventory: Storing inventory in Nebraska creates a tax nexus, regardless of sales volume.

Taxable Items: Nebraska imposes sales tax on tangible personal property and certain services.

Registration: Sellers with a nexus must register for a Nebraska sales tax permit.

Tax Rates: Nebraska’s state sales tax rate is 5.5%, with local rates varying by jurisdiction.

Filing Frequency: Monthly, quarterly, or annually based on sales volume.

Compliance: Sellers must ensure accurate reporting and remittance of sales tax.

Permits, certificates and sales tax registration in Nebraska

In Nebraska, registering for sales tax involves obtaining a Nebraska Identification Number by applying through the Nebraska Department of Revenue. Business owners must provide essential information such as business type, ownership details, and contact information.

Registration can be completed online or via mail. Once registered, businesses must collect and remit sales taxes on taxable goods and services sold within the state. Regular filing and remittance of sales tax returns are mandatory.

Registering for sales tax collection in Nebraska

Registering for sales tax collection in Nebraska in 2024 involves several key steps. Here's a guide to help you through the process:

Gather Required Information

Before you start the registration process, make sure you have the following information available:

• Legal business name and address
• Federal Employer Identification Number (FEIN)
• Social Security Numbers (SSN) for sole proprietors
• Business entity type (LLC, corporation, partnership, etc.)
• NAICS code for your business
• Estimated or actual sales figures
• Business start date

Create an Online Account

To streamline the registration process, you should create an account on the Nebraska Department of Revenue's online portal. This will allow you to manage your sales tax collection and filing requirements electronically.

Complete the Sales Tax Permit Application

After creating an account, you will need to fill out the Nebraska Tax Application, Form 20. This form will require the information you've gathered and will guide you through specific questions related to your business operations.

Submit the Application

Once you've completed all required sections of Form 20, submit the application through the online portal. Double-check all entries to ensure accuracy and completeness.

Receive Your Sales Tax Permit

If your application is approved, the Nebraska Department of Revenue will issue you a Sales Tax Permit. This permit is evidence that you are authorized to collect sales tax within the state.

Display Your Permit

The Sales Tax Permit should be displayed prominently at your business location. If you have multiple locations, ensure each location has a copy of the permit.

Start Collecting Sales Tax

With your permit in hand, you can now start collecting sales tax on taxable goods and services in Nebraska. Make sure to stay updated on the current tax rates and any changes in tax laws that may affect your business.

Regularly File Sales Tax Returns

Lastly, you will need to file sales tax returns regularly. The frequency (monthly, quarterly, or annually) will depend on the volume of your sales. Be sure to file returns on time to avoid penalties and interest.

Cost of registering for sales tax in Nebraska in 2024

As of 2023, Nebraska does not charge a fee for registering for a sales tax permit.

Businesses need to register with the Nebraska Department of Revenue to receive a Nebraska Sales Tax Permit if they intend to sell taxable goods or services in the state. This registration can be done online through the Nebraska Tax Application, Form 20.

For retailers, especially those operating online or across multiple regions, factoring in unique requirements like Omaha, NE sales tax can be a challenge. The differences in tax rates necessitate meticulous planning and robust systems for tax collection and remittance, preventing legal and financial discrepancies. Ensuring compliance not only promotes fair competition but also upholds the general economic health of both the city and the state.

Federal tax ID requirements for registering

You generally need an Employer Identification Number (EIN) when registering for a sales tax permit in Nebraska. An EIN is used to identify your business entity to the IRS and other governmental entities, and it is often required for tax purposes, including sales tax registration.

If you don’t already have an EIN, you can apply for one through the Internal Revenue Service (IRS). Here’s how you can apply for an EIN:

Online Application: This is the easiest and fastest way to obtain your EIN. You can complete the online application on the IRS website.

Apply by Mail or Fax: If you prefer, you can also complete Form SS-4 and submit it to the IRS by mail or fax.

Here is the link to apply for an EIN through the IRS website: Apply for an EIN Online

Once you have your EIN, you can proceed with registering for a sales tax permit in Nebraska through the Nebraska Department of Revenue website.

Here is the link to register for a sales tax permit in Nebraska: Register for a Nebraska Sales Tax Permit

Streamlined sales tax program and Nebraska

Nebraska is a member of the Streamlined Sales Tax (SST) program.

The SST program is a cooperative effort among multiple states to simplify and modernize sales and use tax administration to make it easier for businesses to comply with tax laws. By participating in the SST program, states like Nebraska aim to reduce the complexity of tax collection, particularly for online and remote sellers.

Acquiring a business and registering for sales tax in Nebraska

When acquiring a business in Nebraska and needing to register for sales tax, you'll need to take several steps to ensure compliance with the state tax laws. Here's an overview of what's generally required:

Federal Employer Identification Number (EIN): Obtain an EIN from the IRS if you don’t already have one. This is a crucial identifier for your business.

Legal Structure: Ensure your business structure (e.g., sole proprietorship, partnership, corporation, LLC) is properly established according to Nebraska law.

Nebraska Identification Number: If the business already has a Nebraska Identification Number, this will be transferred to you as the new owner. If not, you will need to apply for one through the Nebraska Department of Revenue.

SS-4 Form: Complete and submit Form SS-4 to the IRS to establish your federal EIN, which may be necessary for state tax registration.

Form 20 - Nebraska Tax Application: Complete the Nebraska Tax Application, Form 20, which is required for obtaining a sales tax permit. This form requests detailed information about your business, such as the type of business, business activities, and locations.

Transfer of Existing Permits: If you’re acquiring an existing business, inquire about transferring any existing sales tax permits and accounts to your name. Ensure all previous sales tax liabilities are settled before the transfer.

Business Licensing: Verify any additional local or municipal licensing requirements, as these can vary by city or county within Nebraska.

Records of Purchase and Sale: Maintain comprehensive records of the business acquisition, including purchase agreements and a list of assets acquired.

Billing and Due Dates: Familiarize yourself with the billing and filing due dates for sales tax returns in Nebraska to ensure timely compliance.

NEDSS: Use the Nebraska Department of Revenue's online portal, Nebraska Online Sales and Use Tax System (NEDSS), to register and manage your sales tax account.

Other Nebraska registrations to consider

In Nebraska, aside from sales tax registration, businesses may need to consider several other types of registrations and permits depending on the nature of their operations:

Employer Identification Number (EIN): If you have employees, you’ll need to obtain an EIN from the IRS for federal tax purposes.

Nebraska State Employer Registration: If you hire employees, you must register with the Nebraska Department of Labor for state unemployment insurance and withhold Nebraska state income taxes from employees' wages.

Business Licenses and Permits: Depending on your business type, you may need specific local licenses or permits. For instance, businesses in the food industry need health permits, while construction businesses may need various trade-specific licenses.

Occupational Licenses: Certain professions and trades require state-specific occupational licenses. This includes professions like healthcare providers, electricians, and real estate agents.

Use Tax Permit: If you're making purchases for your business from out-of-state suppliers and do not pay sales tax on those items, you may be required to register for and pay use tax.

Zoning and Land Use Permits: Check with local city or county offices to ensure your business location complies with zoning regulations.

Nebraska Tax ID: In addition to sales tax, you might need a Nebraska state tax ID for other state tax purposes.

Health and Safety Permits: If your business deals with products or services that could impact public health or safety, you might need relevant permits. For example, businesses that sell alcohol or tobacco, or daycare centers.

Trade Name Registration: If you're doing business under a name other than your legal business name, you may need to register a DBA (Doing Business As) with the state.

Requirements for online sellers in Nebraska

Yes, there are special requirements for online sellers regarding sales tax collection in Nebraska.

As of January 1, 2019, Nebraska has implemented an economic nexus law. This means that out-of-state sellers, including online retailers, must collect and remit Nebraska sales tax if they have $100,000 or more in gross sales or 200 or more separate transactions in the state during the current or previous calendar year.

Additionally, marketplace facilitators that meet these thresholds are also required to collect and remit sales tax on behalf of sellers using their platforms.

Collecting sales tax in Nebraska

Understanding origin vs. destination sales tax collection

The state of Nebraska follows a destination-based sales tax system.

This means that sales tax is calculated based on the location where the purchaser takes possession of the item (the delivery location), rather than the location of the seller or the origin of the sale.

Taxable products in Nebraska

In Nebraska, sales tax is applied to a variety of goods and services. As of 2024, here is an overview of product genres that typically incur sales tax:

Tangible Personal Property: This includes all physical goods such as electronics, furniture, appliances, clothing, and vehicles.

Prepared Food and Beverages: Sales tax applies to meals sold at restaurants, prepared food items in grocery stores, and beverages.

Utilities and Fuel: Electricity, natural gas, water, and other utilities typically fall under taxable items for residential and commercial use.

Telecommunication Services: This covers services like phone bills, both wireless and landline, as well as internet service.

Digital Goods: Downloadable music, movies, e-books, software, and other digital products are subject to sales tax.

Personal Services: This can include services like haircuts, spa treatments, and other personal care services.

Leases and Rentals: Leasing or renting tangible goods, including vehicles, equipment, and other property, are generally taxable.

Construction and Building Materials: Items such as lumber, plumbing supplies, and other building materials are subject to sales tax.

General Services: This category encompasses services like repair and maintenance services, installation services, and other labor when it involves tangible personal property.

Admissions and Amusements: This includes tickets to events, recreational activities, and amusement park admissions.

Non-taxable products in Nebraska

In the state of Nebraska, certain product categories are exempt from sales tax. These generally include:

Food for Home Consumption: Groceries and other food items meant for home preparation and consumption are usually exempt.

Prescription Medications: Most prescription drugs and certain medical devices are not subject to sales tax.

Agricultural Products: Items like seeds and fertilizers used in farming activities typically receive tax exemptions.

Utilities: Residential electricity, gas, and water services are often exempt or subjected to special tax rates.

Is SaaS taxable in Nebraska?

In Nebraska, Software as a Service (SaaS) is considered taxable.

This means businesses that provide SaaS products are required to charge sales tax on the service they deliver to their customers within Nebraska. Be sure to stay updated with the state's tax regulations for any changes.

Are digital products taxable in Nebraska?

In Nebraska, as of 2024, digital products like downloaded music, movies, and software are subject to sales tax.

The state considers these products taxable similar to their physical counterparts, ensuring a consistent approach in the taxation of both tangible and digital goods.

Are services taxable in Nebraska?

In Nebraska, most services are not subject to sales tax; however, there are exceptions. Specific services such as certain utilities, admissions, lodging, and repairs are taxable.

Sales tax exemption certificates

In Nebraska, a sales tax exemption certificate allows qualifying purchasers to buy goods and services without paying sales tax. These certificates are provided to businesses, organizations, or individuals who are eligible for tax-exempt status, such as nonprofits, governmental entities, and certain resellers.

To use an exemption certificate, the buyer must complete and present a valid form detailing the nature of their exemption and describing the qualified purchase. Sellers must retain these certificates for at least three years to substantiate the tax-exempt sale if audited.

State tax holidays in Nebraska for 2024

Sales tax holidays are specific periods when sales taxes are waived on certain items to encourage consumer spending.

Nebraska does not have any sales tax holidays scheduled for 2024.

Filing sales tax returns in Nebraska

Step-by-Step Process

Register for a Sales Tax Permit: Apply online via the Nebraska Department of Revenue's website to get a sales tax permit.

Determine Sales Tax Rate: Use the tax rate that applies to your business location and any other applicable local rates.

Collect Sales Tax: Charge customers the correct sales tax rate at the point of sale.

Keep Detailed Records: Maintain accurate records of all sales, taxable and non-taxable, and the taxes collected.

File Sales Tax Returns: File returns online via the Nebraska Department of Revenue portal according to your assigned filing frequency (monthly, quarterly, or annually).

Remit Sales Tax: Pay the collected sales tax to the Nebraska Department of Revenue by the due date.

Due Dates: Returns and payments are typically due on the 20th of the month following the reporting period.

Partial Payment Options: If necessary, make partial payments, but ensure the total tax amount is paid by the deadline to avoid penalties.

File Zero Returns: Even if no sales were made, you must file a return showing zero sales.

Amend Returns: File an amended return if you need to correct any errors on previously submitted returns.

Sales tax filing frequency

In Nebraska, the frequency of filing sales tax returns depends primarily on the taxpayer’s average monthly sales tax liability. The Nebraska Department of Revenue classifies businesses into different filing frequencies to streamline the process, based on their reported taxable sales and the amount of sales tax they typically owe.

Monthly Filing: Businesses with a significant sales tax liability, generally above $3,000 per month, are required to file their sales tax returns on a monthly basis. These filings are due on the 20th day of the month following the reporting period.

Quarterly Filing: Businesses whose average monthly sales tax liability falls between $900 and $3,000 are typically required to file on a quarterly basis. The due dates for these filings are the 20th of April, July, October, and January for the corresponding quarters.

Annual Filing: Small businesses with a low sales tax liability, usually less than $900 per month, are eligible to file annually. The annual returns are due on January 20th of the following year.

Filing when no sales tax has been collected

In Nebraska, if a business is registered for sales tax but fails to collect it, the business is still liable for the tax on those sales. The Nebraska Department of Revenue can impose penalties and interest on the unpaid tax amount.

Additionally, neglecting to collect and remit sales tax can result in audits, fines, and possible revocation of the business's sales tax permit.

Penalties for late filing and non-payment of sales taxes

In Nebraska, timely filing and payment of sales taxes are crucial responsibilities for businesses. If a business misses the deadline for filing its sales tax returns, it is deemed to have made a late filing. This can result in penalties and interest charges on the overdue amount.

The state may impose a penalty of up to 10% of the unpaid tax for each month or part of a month that the return is late. Interest accrues daily on unpaid sales tax from the due date of the return until the tax is paid.

Non-payment of sales taxes carries more severe consequences.

Businesses that fail to remit collected sales taxes are effectively holding onto revenue that legally belongs to the state. This act can lead to substantial penalties, interest charges, and potentially more severe legal actions, including liens on property, garnishment of wages or bank accounts, and in extreme cases, criminal charges against the business owner.

Sales tax discounts and incentives

In 2024, Nebraska offers a variety of sales tax incentives and discounts to support businesses and promote economic growth. Key incentives include:

Nebraska Advantage Act: This program provides sales tax refunds on purchases of qualifying machinery, equipment, and other property for businesses that meet investment and job creation thresholds. Depending on the scale of the project, businesses may also be eligible for additional tax credits.

Nebraska Microenterprise Tax Credit: Small businesses with fewer than five employees can receive a non-refundable tax credit of up to 20% on certain business growth investments, which includes the purchase of equipment and property improvements.

Exemptions for Manufacturing: Purchases of manufacturing machinery, equipment, and chemicals used in processing, manufacturing, or assembling products are typically exempt from sales tax. This encourages industrial and manufacturing operations to invest in Nebraska.

Agricultural Equipment Exemption: Farmers and agricultural businesses can benefit from sales tax exemptions on certain agricultural machinery and equipment, promoting the agricultural sector’s investment in modern and efficient tools.

Renewable Energy Tax Exemption: Businesses investing in renewable energy infrastructure, such as solar panels and wind turbines, may receive exemptions from sales tax on the equipment, supporting sustainable growth initiatives.

2024 sales tax filing due dates for Nebraska

Coming soon.

Shipping and sales tax in Nebraska

When to pay tax on shipping in Nebraska

In the state of Nebraska, as of the most recent guidelines available, businesses are required to pay sales tax on shipping charges if those charges are part of the sale of taxable goods. This means that if the items being shipped are subject to sales tax, then the shipping fees associated with those items will also be taxable.

However, if the items being shipped are non-taxable, or if the shipping is separately stated and the buyer has the option to pick up the goods themselves, then the shipping charges may not be subject to sales tax.