Nebraska tax rank improves to 16th in Tax Foundation 2027 index

Nebraska improved eight places in the national tax rankings, from 24th to 16th, according to the Tax Foundation’s 2027 State Business Tax Climate Index. The climb is attributed to the continued phase-down of the state’s income tax rates. The full index is available from the Tax Foundation.

Tax Rates Drop in Nebraska

The state’s top individual income tax rate decreased from 5.2 percent to 4.55 percent, eliminating its fourth tax bracket. This change moved Nebraska from 22nd to 13th in the individual income tax component of the index. The state also implemented a flat corporate income tax rate of 4.55 percent. Conformity to full bonus depreciation allowed Nebraska’s corporate tax rank to climb four spots to 9th.

Remaining Challenges

Despite these improvements, Nebraska’s tax code retains several uncompetitive features. The state maintains a “convenience of the employer rule,” which can lead to double taxation for remote employees, and requires nonresidents to file and pay income tax after working in the state for just one day. Nebraska also includes net CFC tested income in its corporate tax base, which can increase liability for multistate companies. Property taxes remain high regionally and nationally, and Nebraska is one of the few states to still impose a capital stock tax, also known as the Nebraska Occupation Tax.

A Decade of Rankings

Nebraska’s rank has fluctuated over the years, improving significantly in the latest index. In 2020, the state ranked 25th, dropping to as low as 28th in 2024 before rebounding. The 2027 Index measures each state’s tax law as of July 1, 2026, and does not reflect changes enacted after that date. The full table of Nebraska’s annual rankings and scores from 2020 to 2027 is available on the Tax Foundation’s website.