Bonuses in Nebraska are taxed as regular income under the state’s individual income tax rate, which drops to 5.2% for 2025 per the PTET schedule. Employers may withhold at a flat 1.5% "special income tax withholding rate" if applicable, per the Nebraska Department of Revenue.

There’s no separate "bonus tax" in Nebraska; bonuses fall under the state income tax rate of 5.2% for 2025. This rate applies unless your employer uses the optional 1.5% special withholding rate for supplemental wages.

Yes, the state income tax rate decreasing to 5.2% in 2025 (from 5.84% in 2024) will slightly lower the tax on your bonus. However, federal taxes on bonuses remain unchanged, typically withheld at 22% for amounts up to $1 million.

Multiply your bonus by Nebraska’s 5.2% state income tax rate, then add federal withholding (usually 22%) and any applicable payroll taxes like Social Security (6.2%) and Medicare (1.45%). For example, a $1,000 bonus would see about $52 in state tax and $220 in federal tax withheld, before other deductions.

No tax credits specifically target bonuses in 2025, but new credits like the Family Caregiver Tax Credit (up to $2,000-$3,000) or Pregnancy Help Act Credit could offset your overall tax liability. These apply to eligible expenses or donations, not bonus income directly.

The PTET, with a 5.2% rate in 2025, applies to business income for electing partnerships and S-corporations, not employee bonuses. If you’re an employee receiving a bonus, PTET doesn’t impact your tax; it’s for business owners.

Bonuses may be taxed differently if your employer uses the 1.5% special withholding rate instead of the standard wage bracket method. This flat rate simplifies withholding but reconciles with the 5.2% income tax rate when you file your return.

You can’t avoid state income tax on your bonus, but contributing to a pre-tax retirement account (like a 401(k)) or claiming credits like the Nebraska Property Tax Credit for community college taxes paid could lower your overall tax burden. Plan deductions before year-end for maximum benefit.

Employers must use the updated Nebraska Circular EN for 2025, effective January 1, 2025, which reflects the 5.2% income tax rate and 1.5% special withholding option. Most payroll systems will adjust automatically by the first pay period of 2025.

Nebraska’s 5.2% rate in 2025 is moderate—lower than Iowa’s 5.7% but higher than South Dakota’s 0% (no state income tax). Combined with federal taxes, your bonus tax burden in Nebraska remains competitive regionally.