Nebraska ~ Personal Income Tax: Rate Reduction Bill Signed by the Governor

Governor Dave Heineman has signed a bill that reduces the Nebraska personal and fiduciary income tax rates beginning in the 2013 tax year and expands the lower three personal income tax brackets for tax years beginning on January 1, 2014, as outlined below.

Single and Married Filing Separately

For tax years beginning before January 1, 2013, a tax rate of 2.56% applies to the first $2,400 of taxable income, a tax rate of 3.57% applies to the next $15,100 of taxable income, a tax rate of 5.12% applies to the next $9,500 of taxable income and a tax rate of 6.84% applies to all taxable income above $27,000. For tax years beginning on or after January 1, 2013, the bill reduces the 2.56% rate to 2.46%, the 3.57% rate to 3.51% and the 5.12% rate to 5.01%. For tax years beginning on or after January 1, 2014, the bill applies the 2.46% rate to the first $3,000 of taxable income, the 3.51% rate to the next $15,000 of taxable income, the 5.01% rate to the next $11,000 of taxable income and the 6.84% rate to all taxable income above $29,000.

Single and Married Filing Jointly

For tax years beginning before January 1, 2013, a tax rate of 2.56% applies to the first $4,800 of taxable income, a tax rate of 3.57% applies to the next $30,200 of taxable income, a tax rate of 5.12% applies to the next $19,000 of taxable income and a tax rate of 6.84% applies to all taxable income above $54,000. For tax years beginning on or after January 1, 2013, the bill reduces the 2.56% rate to 2.46%, the 3.57% rate to 3.51% and the 5.12% rate to 5.01%. For tax years beginning on or after January 1, 2014, the bill applies the 2.46% rate to the first $6,000 of taxable income, the 3.51% rate to the next $30,000 of taxable income, the 5.01% rate to the next $22,000 of taxable income and the 6.84% rate to all taxable income above $58,000.

Head of Household

For tax years beginning before January 1, 2013, a tax rate of 2.56% applies to the first $4,500 of taxable income, a tax rate of 3.57% applies to the next $23,500 of taxable income, a tax rate of 5.12% applies to the next $12,000 of taxable income and a tax rate of 6.84% applies to all taxable income above $40,000. For tax years beginning on or after January 1, 2013, the bill reduces the 2.56% rate to 2.46%, the 3.57% rate to 3.51% and the 5.12% rate to 5.01%. For tax years beginning on or after January 1, 2014, the bill applies the 2.46% rate to the first $5,600 of taxable income, the 3.51% rate to the next $22,200 of taxable income, the 5.01% rate to the next $14,200 of taxable income and the 6.84% rate to all taxable income above $43,000.

Fiduciary Income

For tax years beginning before January 1, 2013, a tax rate of 2.56% applies to the first $500 of taxable income, a tax rate of 3.57% applies to the next $4,200 of taxable income, a tax rate of 5.12% applies to the next $10,450 of taxable income and a tax rate of 6.84% applies to all taxable income above $15,150. For tax years beginning on or after January 1, 2013, the bill reduces the 2.56% rate to 2.46%, the 3.57% rate to 3.51% and the 5.12% rate to 5.01%.

L.B. 970, Laws 2012, applicable as noted

AUTHOR

Wolters Kluwer Tax and Accounting

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