Article
3 min read
Comprehensive Guide to Payroll Taxes in Nebraska
US payroll
Author
Deel Team
Last Update
July 14, 2025
Key takeaways
- What state payroll taxes Nebraska employers must withhold from their employees' pay
- What state-specific contributions employers are required to make, including State Unemployment Insurance and Workers' Compensation Insurance
- How and when to remit and pay Nebraska's state payroll taxes and contributions
Employers in Nebraska must navigate a mix of federal rules and state-specific obligations, especially when it comes to Nebraska withholding tax.
From calculating state income tax to managing State Unemployment Insurance (SUI) and Workers’ Compensation, staying compliant is essential to avoid penalties and payroll errors.
This comprehensive guide outlines what Nebraska employers need to withhold and remit from employee wages, along with the required contributions they must make.
State Income Tax (SIT)
Nebraska employers are required to withhold and remit Nebraska State Income Tax (SIT) from their employees working in the state. To begin withholding Nebraska income taxes, employers must first register by completing the Nebraska Tax Application Form 20, to obtain a withholding certificate. You can pay the withheld amount through Nebraska’s online portal.
In Nebraska, the rate of SIT is progressive. In 2025, it applies to single filers' income as follows:
- 2.46%: $0 - $3,900
- 3.51%: $3,900 - $23,370
- 5.01%: $23,370 - $37,670
- 6.84%: Over $37,670
Employers are required to make monthly income tax withholding deposits if over $500 was withheld during the period. These deposits must be made on or before the 15th day of the following calendar month.
For more information on paying the withholding amount, the Nebraska Department of Revenue provides various resources for businesses.
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State Unemployment Insurance (SUI)
State Unemployment Insurance (SUI) is an employer-funded program that provides temporary financial support for eligible workers in Nebraska who are unemployed through no fault of their own.
Employers must pay SUI on a taxable base wage of $9,000 per employee. A higher taxable wage of $24,000 applies for negatively rated employers. The new employer rate for a non-construction employer is 1.25%, and the new employer rate for a construction employer is 5.40%. The rate of SUI for established employers varies between 0% to 5.4%.
As an employer in Nebraska, you're required to file and pay SUI quarterly. You can manage and pay your Nebraska unemployment insurance through an easy-to-use online portal.
Related resources: Social Security Wages
Workers’ Compensation
Nebraska employers with one or more employees working in the state are required to supply Workers’ Compensation (WC) for their employees. WC provides financial support to employees in the case of work-related injury or illness, and also gives employers and employees legal protection.
You can purchase a Workers’ Compensation Insurance policy from a private insurer licensed by the Nebraska Department of Insurance, such as the Nebraska Workers’ Compensation Insurance Plan (NWCIP). Alternatively, you can apply to self-insure with the Nebraska Workers’ Compensation Court, subject to certain requirements.
Penalties for failure to provide Workers’ Compensation Insurance include:
- A civil fine of up to $1,000.00 for each violation, with each day of non-compliance considered a separate violation
- Imprisonment for up to one year and/ or a $1,000.00 fine, if criminal charges apply
- A possible injunction prohibiting you from doing business in Nebraska until compliance is secured, in addition to the civil fine
- An injured employee may sue an employer for damages in district court, and your employer may lose its common law defenses
Related resources: How Do State Payroll Taxes Vary in the US? (2025 Guide)
Submission process for payroll taxes in Nebraska
Employers are required to file income tax withholding electronically when the total payment made in the previous year exceeds $5,000.
Similarly, employers with over 50 wages and tax statements (such as W2, W-2G, 10-99R, 1099-MISC, and 1099-NEC) are also required to file these statements electronically.
Simplify US payroll tax compliance with Deel
While this guide provides essential information on Nebraska payroll taxes, payroll compliance, and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.
Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.
Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.
FAQs
Who does Nebraska withholding tax apply to?
Nebraska withholding tax applies to employers who pay wages to employees working in Nebraska, regardless of whether the employer is located in Nebraska or another state. It also applies to certain non-wage payments like pensions and annuities, if sourced to Nebraska.
Does Nebraska have state income tax for non-residents?
Yes. Non-residents are subject to Nebraska income tax on income earned from Nebraska sources. Employers must withhold state income tax from non-residents working in Nebraska.
What is the convenience of the employer rule in Nebraska?
Nebraska does not follow the "convenience of the employer" rule like New York. Employees are taxed based on the location where the work is physically performed, not where the employer is located.
How to remove withholding tax in Nebraska?
Employees who qualify for exemption must submit Nebraska Form W-4N to their employer, certifying that they meet exemption conditions (e.g., they had no Nebraska tax liability in the prior year and expect none this year). Employers must retain this form but do not submit it unless requested.
