Payroll tax in Nebraska: What employers need to know [2024]

No matter the size of your company, you’ll have to deal with a multitude of payroll taxes when hiring employees. Across the US, businesses must stay on top of federal FICA taxes like Medicare and Social Security, plus state and local payroll taxes. These taxes vary from state to state, so it’s vital to understand the tax regulations where your employees live. And while it’d be nice to disregard them, in Nebraska, late paperwork and missed deadlines can add up to legal headaches and financial penalties. 

Nebraska uses a progressive tax system, meaning the more your employees earn, the more taxes they’ll pay. And if your business is expanding, you’re looking at increased employer tax contributions and higher employee withholdings. 

If you have employees in Nebraska, it’s critical to master the different payroll taxes, their rates, and who pays what and when. Let’s jump in. 

The 2 Nebraska payroll taxes

In addition to federal payroll tax obligations, Nebraska employers have two state payroll taxes to contend with. The Nebraska Department of Revenue oversees the state’s income tax, while the Department of Labor is responsible for the state unemployment insurance (SUI) tax. 

Employers that conduct business or have an office in Nebraska must withhold state income tax for all employees. Unemployment insurance tax must be withheld once you receive your state UI account and tax rate (this takes about seven days after applying). New hires and rehires must be reported within 20 days to the Nebraska State Directory of New Hires.

Let’s take a closer look at these two taxes. 

Personal income tax

In addition to the federal income tax you pay to the IRS, employers must withhold Nebraska state income tax. The tax helps fund Nebraska’s schools, healthcare, public safety, and other state services. The Nebraska Revenue Act of 1967 requires eligible employers to withhold the tax from the gross pay of resident and nonresident employees—Nebraska doesn’t have reciprocity agreements with other states. 

The state has a progressive tax system, and the income tax rate is based on an employee’s W-4N form (the Nebraska version of the federal W-4 form), which details wages and exemptions. These are the tax brackets and rates for the most common filing statuses:

You can use several methods to determine the amount of income tax you should withhold:

• Wage bracket method: Using this method, you can pinpoint the amount from withholding tables published by the Department of Revenue. The amount is based on the pay period, filing status, employee wages, and number of allowances. This is the least complicated of the two methods. 
• Percentage method: This method requires more calculations than the wage bracket method. You can determine the amount of withholding based on the payroll period, taxable wages, tax withholding allowances, filing status, standard deductions, and any relevant exemptions. 

If you calculate federal withholding using any of these methods, you may use the same approach to determine income tax withholding for Nebraska:

• Annualized wages
• Average estimated wages
• Cumulative wages
• Part-year employment

Additional information on tax withholding rates, tax brackets, and more is available on the Nebraska Department of Labor website.

Unemployment insurance tax

Liable employers must pay Nebraska’s unemployment insurance (UI or SUI) tax. A liable employer is an eligible individual or organization that employs workers and meets the Nebraska Employment Security Law coverage terms. There are different liability thresholds for different types of employers. We’ll cover general business employers here, but if you employ agricultural, domestic, or other types of workers, refer to this guide for specific information. 

Nebraska’s UI tax is part of a national US Department of Labor program created under the Social Security Act. Unemployment insurance provides temporary payments to people who find themselves out of work due to a situation out of their control, like layoffs. Employers pay both federal (FUTA) and state (SUTA) unemployment insurance taxes. 

General business employers must pay Nebraska’s unemployment insurance tax under the following circumstances:

• Employing one or more people on a day in 20 different calendar weeks in a calendar year (whether consecutive or not)
• Paying gross wages of $1,500 or more in any calendar quarter in a calendar year
• Acquiring a business from a liable employer

Unemployment insurance tax rates are based on the type of employer and their experience rating. Nebraska’s experience rating system looks at an employer’s actual experience and compares it to an array of other employers in 20 different categories. The experience rating is determined by factors including the amount of wages the employer pays, taxes paid, timeliness of payments, and UI benefits charged to the employer's account. 

New employer rates are 1.25% for non-construction employers and 5.4% for construction employers. Employers who aren’t eligible for experience ratings are assigned a combined tax rate. This will vary from year to year. 

You must apply for an Unemployment Insurance Tax Number even if you’re not liable. The Commissioner of Labor will make the final determination of liability. Tax rate notices are issued in December and are available from the Department of Labor’s NEworks website.

Coming to grips with payroll taxes in Nebraska can be overwhelming. But Rippling’s payroll compliance software eases the burden. Rippling automatically calculates all your taxes and submits your tax forms and payments to the correct authorities on time. Rippling consistently monitors federal, state, and local tax laws so you can be confident that you’re in total compliance. If you need assistance registering and maintaining your state tax accounts, Rippling’s PEO can do that for you, too.

Payroll tax due dates in Nebraska

Now that we’ve covered the types of taxes, let’s look at when they’re all due.

Personal income tax due dates

Employers that transact business or have an office in Nebraska and make payments to workers must file a Nebraska Income Tax Withholding Return (Form 941N) quarterly—unless licensed as an annual filer. This applies whether or not you made payments during the filing period. Returns are due on or before the last day of the month following the end of the quarter:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

Annual filers must submit their withholding returns (Form 941N) by January 31 of the following year. 

Due dates for payments depend on the amount of state income taxes withheld. In most cases, payments are due monthly. You must make deposits by the 15th day of the following month. The Annual Reconciliation of Income Tax Withheld form (W-3N) is due on or before January 31 of the following year. 

Late filing and late payments can be costly. Late returns are subject to a 5% penalty based on the amount due for each month the return is late, up to 25% or $25 (whichever is greater). Failure to pay withholding taxes on time will result in a 5% penalty on the amount unpaid. These penalties and fines increase until the returns are filed and taxes are paid.

Unemployment insurance tax due dates

Employers must submit quarterly wage reports and payments to the Nebraska Department of Labor with the following due dates:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

Late filings are subject to a penalty of 1.5% per month until paid. 

How to submit payroll taxes in Nebraska

We’ve looked at the different payroll taxes in Nebraska and when they’re due. The next step is to pay them, and employers have several options. 

Submit personal income tax

The DOR encourages all taxpayers to file electronically, and most employers filing more than 50 wage and tax statements are required to do so. In addition, if your remittances in any prior year were more than $5,000, you must make payments for income tax withholding using one of the electronic payment methods below.

Electronic payment options 

Electronic funds withdrawal (EFW): Include your payment with your electronically filed return. The payment is deducted automatically from your bank account on the specified date. 

Nebraska e-pay: This is the Department of Revenue’s online payment system. Simply enter your payment information along with the date to have your account debited. 

ACH credit: You can create an electronic file instructing your bank to credit the state’s bank account. 

Credit cards: You can use American Express, Discover, MasterCard, and VISA to make secure payments through the ACI Payments website. There is a convenience fee associated with using this payment provider. 

Telephone payment options 

Nebraska Tele-pay: With the Nebraska Department of Revenue’s pay-by-phone system, you simply dial (800)-232-0057 and follow the prompts. You'll receive a confirmation number after entering your payment amount, bank information, and the date you want your account debited. 

Credit cards: In addition to their online service, ACI Payments also offers a telephone payment service. You can use major credit cards, including American Express, Discover, MasterCard, and VISA. Note that you’ll need to provide the Nebraska Jurisdiction Code—3700. A convenience fee applies. 

File by mail

Although the Department of Revenue encourages employers to file electronically, eligible employers can file by sending forms and payments to: 

Nebraska Department of Revenue
PO Box 98915
Lincoln, Nebraska 
68509-8915 

Submit unemployment insurance tax

Nebraska employers can file their wage reports and pay quarterly unemployment tax online via the Department of Labor’s NEworks website. A file transfer protocol (FTP) option is available for large employers. Employers with payrolls of more than $100,000 in either of the two previous years must file reports and pay electronically. 

Pay by mail

Employers under the payroll threshold above may pay by mail. To do so, calculate the amount of tax due on the NEworks site. If you’re not paying by EFT, you can print a voucher and mail it with your payment to: 

Nebraska Department of Labor
PO Box 94600
Lincoln, Nebraska 
68509-4600

Rippling’s full-service payroll software

Are you looking for a way to settle all your taxes easily? Rippling’s payroll software is so powerful it practically runs itself. Along with automating compliance work, it ensures timely and accurate submission of your federal, state, and local payroll taxes to the proper agencies.

FAQs about Nebraska payroll taxes

Are there local tax laws in Nebraska?

No. There are no local employer payroll taxes in Nebraska.

Can your tax returns be audited in Nebraska?

Yes. Employer tax returns can be audited to ensure compliance with Nebraska tax laws. The Department of Revenue conducts state income tax audits. The Department of Labor’s Benefit Payment Control Unit (BPCU) oversees unemployment insurance tax audits. 

Are nonprofit organizations subject to payroll taxes in Nebraska?

In Nebraska, nonprofits must withhold state income tax on wages that are subject to federal withholding. Nonprofit organizations must pay unemployment insurance tax on behalf of their employees. However, they can elect to be a reimbursable employer. This means the nonprofit repays any benefits the state has paid on its behalf.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.