New Nebraska Resident? You May Qualify for a State Income Tax Exemption!

If you’re considering moving to Nebraska, here’s some great news: starting in 2025, qualifying new residents can exclude all Nebraska wage income from state taxes for up to two years! This new law is designed to attract top talent by offering significant tax savings—but there are important conditions to keep in mind.

Who Qualifies?

To be eligible for this tax exemption, you must meet the following criteria:

• Become a Nebraska resident on or after January 1, 2025.

• Have an annual Nebraska-sourced wage income of at least $70,000 but no more than $250,000.

• Have not been a Nebraska resident in the year before claiming the exemption.

• Make a one-time election to claim this benefit within two years of moving to Nebraska.

Important Conditions

While this tax break can save you thousands of dollars, it comes with key requirements:

• You must maintain Nebraska residency for two full calendar years after claiming the exemption.

• If you move out of Nebraska before completing two years, you must repay all state tax savings from the exemption (this is called “recapture”).

• The Nebraska Department of Revenue will treat the repaid amount as unpaid taxes, which will be due in the next tax return after you leave.

• The state can collect these taxes for up to three years after they are due.

Future Adjustments

Starting in 2026, the income limits ($70,000–$250,000) will be adjusted for inflation, ensuring that the benefit remains relevant over time.

What This Means for You

If you’re a professional earning between $70,000 and $250,000 and are considering relocating, this tax exemption could make Nebraska an even more attractive place to live and work. However, it’s essential to plan ahead—if you leave too soon, you’ll have to repay any tax benefits received.

Have questions about how this impacts your tax situation? Contact us at LedgerLine Accounting for expert guidance on tax planning and compliance.

Get In Touch Today!