Nebraska State Income Tax Withholding

Reference Number: NFC-23-1695397881
Published: September 25, 2023
Effective: Pay Period 18, 2023

Summary

This bulletin supersedes Reference Number: NFC-23-1680034066, Nebraska State Income Tax Withholding, dated March 28, 2023, to eliminate the minimum withholding requirement for employees who claim Exempt on the Nebraska W-4 form. 

In order to claim exemption from withholding of Nebraska State taxes, the employee must complete and submit a Nebraska Withholding Allowance Certificate (W-4N) form to initially claim an Exempt status. An exemption is valid for one year. A new form must be submitted annually (by February 15th) to continue the exemption.

Note: It is the responsibility of the Agency personnel office to process the W-4N form.

Tax Formulas

State Abbreviation:

 NE

State Tax Withholding State Code:

 31

Acceptable Exemption Form:

 W-4/W-4N

Basis for Withholding:

 State or Federal Exemptions (see the Additional Information section)

Acceptable Exemption Data:

 Y00, N00

TSP Deferred:

 Yes

Special Coding:

 Determine the Total Number of Allowances Claimed field as follows: Y00 - Employee provides proof of number of exemptions claimed to receive the lower withholding percentage, if applicable.
N00 - Employee no longer wants to provide proof of number of exemptions claimed to receive the lower withholding percentage.

Additional Information:

 A State tax certificate is required unless you have submitted a prior to 2020 Federal Form W-4, since Federal exemptions are no longer used in the computation of the State formula. Employees who have not previously submitted a Form W-4N and have submitted a 2020 or later Federal Form W-4, will default to Single and zero (S00). Employees who have not previously submitted a Form W-4N and have not submitted a 2020 or later Federal Form W-4, will default to the prior to 2020 Federal Form W-4 submission. Y00 will be entered for employees who have provided proof that they are entitled to lower withholding than required by LB223.

Withholding Formula (Effective Pay Period 18, 2023)

  1. Subtract the nontaxable biweekly Thrift Savings Plan contribution from the gross biweekly wages.
  2. Subtract the nontaxable biweekly Federal Employees Health Benefits Plan payment(s) (includes dental and vision insurance program and Flexible Spending Account — health care and dependent care deductions) from the amount computed in step 1.
  3. Add taxable fringe benefits (e.g., taxable life insurance) to the adjusted gross biweekly wages.
  4. Multiply the adjusted gross biweekly wages by the number of pay dates in the tax year to obtain the gross annual wages.
  5. Determine the exemption allowance by applying the following guideline and subtracting this amount from the results in step 4 to compute the taxable income:
    Multiply the number of Allowances by $2,140.
  6. Apply the taxable income computed in step 5 to the following tables to determine the Nebraska tax withholding:

Tax Withholding Table for Single or Head of Household

If the Amount of Taxable Income Is:

The Amount of Tax Withholding Should Be:
Over $0 but not over $3,060 $0.00
Over $3,060 but not over $5,990 2.26% of excess over $3,060
Over $5,990 but not over $19,470 $66.22 plus 3.22% of excess over $5,990
Over $19,470 but not over $28,210 $500.28 plus 4.91% of excess over $19,470
Over $28,210 but not over $35,820 $929.41 plus 6.20% of excess over $28,210
Over $35,820 but not over $67,270 $1,401.23 plus 6.39% of excess over $35,820
Over $67,270 $3,410.89 plus 6.75% of excess over $67,270

Tax Withholding Table for Married

If the Amount of Taxable Income Is:

The Amount of Tax Withholding Should Be:
Over $0 but not over $7,530 $0.00
Over $7,530 but not over $11,610 2.26% of excess over $7,530
Over $11,610 but not over $28,910 $92.21 plus 3.22% of excess over $11,610
Over $28,910 but not over $44,980 $649.27 plus 4.91% of excess over $28,910
Over $44,980 but not over $55,810 $1,438.31 plus 6.20% of excess over $44,980
Over $55,810 but not over $74,010 $2,109.77 plus 6.39% of excess over $55,810
Over $74,010 $3,272.75 plus 6.75% of excess over $74,010
  1. If the employee is eligible for lower withholding than required by Nebraska LB223, proceed to step 8. If the employee claims SINGLE and claims one or fewer exemptions, proceed to step 8. If the employee claims MARRIED and claims two or fewer exemptions, proceed to step 8. Otherwise, calculate the annual tax amount required by LB223 as follows:
    1. Calculate the annual tax following steps 1 through 6 except use one exemption in step 5 for SINGLE filers and use two exemptions in step 5 for MARRIED filers.
    2. Multiply the annual tax by 0.50 to get the annual minimum tax.
    3. If the annual minimum tax is greater than the annual tax based on exemptions claimed, then the annual tax amount is equal to the annual minimum tax. Otherwise, the annual tax amount is equal to the annual tax based on exemptions claimed.
  1. Divide the annual Nebraska tax withholding calculated in step 6 by the number of pay dates in the tax year to obtain the biweekly Nebraska tax withholding.

Resources

To view the updated tax formula, go to the HR and Payroll Clients page from the MyNFC dropdown menu on the National Finance Center (NFC) Home page. Select the Publications tab and select U.S. Income Tax Formulas from the Publications Library section to launch the tax map. Select the desired State from the map provided for the formula.

Previous Tax Bulletin

Inquiries

For questions about NFC processing, authorized Servicing Personnel Office representatives should contact the NFC Contact Center at 1-855-NFC-4GOV (1-855-632-4468) or via the customer service portal at ServiceNow Portal for Federated Users and at ServiceNow Portal for Non-Federated Users.