Anselmo NE Sales Tax:
What Businesses Must Know

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).

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

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.

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.

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.

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.

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.

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.