Nebraska LLC Taxes

Handling the taxes for your Nebraska limited liability company (LLC) is one of the most important aspects of running a business. There are different tax requirements to consider, which are influenced by regulations at both the state and local levels.

In this article, we provide a detailed breakdown of Nebraska LLC taxes, as well as the steps of the tax filing process for Nebraska LLCs.

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

How Is an LLC Taxed in Nebraska?

Taxation in Nebraska isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can also elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or self-employment taxes on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Nebraska to help you ensure your LLC navigates them effectively.

Nebraska Local Taxes

Local laws and tax requirements may vary depending on where you are in Nebraska. Each city or county might have its own set of taxes. 

Here's a quick rundown of the kinds of taxes you might come across in your area:

Sales and Use Taxes

Depending on where you do business in Nebraska or who your customers are, you may have to charge local sales and use tax on the goods or services you sell. This tax is set by each locality and cannot exceed 2%. This is added on top of the state’s 5.5% sales and use tax.

There are two types of local authorities that can charge these taxes in Nebraska:

• Cities
• Counties

Special purpose districts and transit authorities are not authorized to levy such taxes in Nebraska. However, they may receive a portion of the local sales and use tax revenue from the cities or counties where they operate, depending on the interlocal agreements or contracts between them.

Note: To find the sales and use tax rate that’s in effect in your area, use the Nebraska Sales Tax Rate Finder. This is an online tool that allows you to enter your address or zip code and get the current state and local sales and use tax rates for your location. 

Special Situations

To identify which local area’s sales/use tax your LLC needs to pay, the following rules are observed:

• Local Sales Tax: Determined by the location where the sale is made.
• Local Use Tax: Determined by the location where the purchased item is used, stored, or consumed.

However, there are a number of specific cases where these general rules in Nebraska may be applied differently, such as:

• Motor Vehicles, Trailers, Semi-Trailers, and Aircraft: For these sales that are not registered through the Department of Motor Vehicles, the local sales tax rate is based on the residential address of the buyer.
• Electricity, Gas, Water, Pay Television, and Certain Telecommunications Services: For these sales, the local sales tax rate is based on the customer's service address.
• Sales of Certain Construction Services: For these sales, the local sales tax rate is based on the location where the construction service is performed.
• Sales of Certain Digital Products: For these sales, the local sales tax rate is based on the primary use location of the customer, which may be different from the billing address. 

To learn more about the various special situations and their respective requirements, please visit the website of the Nebraska Department of Revenue.

Property Tax

In Nebraska, there is no statewide property tax; instead, property taxes are levied by local governmental subdivisions such as counties, cities, school districts, and other special districts. These local governmental offices will assess the value of real and personal property within their jurisdictions and collect the taxes based on the assessed value. 

For more information on how property tax works in your local area, this means you’ll need to get in contact with either your county’s: 

• Assessor’s Office: For questions about the valuation of your property, the assessment process, exemptions, and appeals.
• Treasurer’s Office: For questions about the payment of your property taxes, tax statements, delinquent taxes, and tax sales.
• Local Clerk’s Office: For questions about the records of your property ownership, deeds, mortgages, liens, and other legal documents.

Note: To assist you in locating the necessary contact details, you can use the county tax office directory made available by the Nebraska Department of Revenue. 

Recommended: Schedule a free consultation with 1-800Accountant to ensure your business remains legally compliant. 

Nebraska State Taxes

Different states have different tax laws and rules that apply to individuals and businesses. Below are some of the most important state-level taxes for LLCs in Nebraska.

Income Tax

LLCs Taxed as C Corps
In Nebraska, if the LLC is classified as a corporation for tax purposes, it will be subject to the Nebraska corporate income tax rates, which are 5.58% on state taxable income up to $100,000 and 7.81% on state taxable income over $100,000 for 2023. 

The LLC will then have to file a Nebraska Corporation Income Tax Return, Form 1120N, by the 15th day of the fourth month following the close of the tax year and make estimated tax payments if its expected tax liability for the year is more than $400.

LLCs Taxed as Partnerships or Disregarded Entities
If the LLC is classified as a partnership or a disregarded entity for tax purposes, it will not be subject to the Nebraska corporate income tax, but it will have to report its income and expenses on a Nebraska Return of Partnership Income, Form 1065N, or a Nebraska Individual Income Tax Return, Form 1040N, respectively. 

The LLC must distribute its income and deductions to its members according to their profit and loss shares. LLC owners report their portions on their Nebraska Nebraska state income tax returns and pay taxes at individual rates. The LLC must file its Nebraska tax return by the 15th day of the third month after the tax year ends and make estimated tax payments if the expected liability exceeds $500.

Sales-Related Taxes

Nebraska imposes a state sales tax rate of 5.5% on the gross receipts from the sale of tangible personal property and certain services within the state. This rate applies across the state, but local governments can impose additional sales taxes up to a statutory limit of 2%, resulting in a combined state and local sales tax rate of up to 7.5%, depending on the location of the sale. 

The Nebraska sales tax applies to most tangible items like clothes and electronics but not to prescription drugs, medical equipment, or food for home consumption. Prepared foods are taxed at state and local rates plus an extra 1%, totaling around 10%.

In addition to the general sales tax, Nebraska also levies specific taxes on the sale of certain products, such as:

• Cigarettes and Tobacco Products: Cigarettes are taxed at $0.64 per pack of 20, and other tobacco products are taxed at 20% of the wholesale price.
• Motor Fuels: Gasoline, diesel, and other motor fuels are taxed at 29.3 cents per gallon, plus a variable tax that changes every six months based on the wholesale price of fuel.
• Alcoholic Beverages: Beer, wine, and spirits are taxed at different rates based on the alcohol content and the size of the container. The rates range from $0.31 per gallon of beer to $3.75 per gallon of spirits.
• Lodging: Hotels, motels, and other lodging establishments are required to collect a 1% state tax and a 4% local tax on the gross receipts from renting rooms or accommodations for less than 30 days.

This is not a complete list of the products that are subject to specific sales-related taxes in Nebraska. To ensure your LLC’s compliance with the tax laws, you should consult a qualified accountant who can advise you on the applicable tax rates and exemptions for your business.

Note: If your business loans to sell taxable goods or services, you must register for a Nebraska tax ID and sales tax permit. You can register for both on the Nebraska Department of Revenue website. 

Transportation Taxes

According to the Nebraska Department of Revenue, transportation taxes are imposed on certain types of businesses that provide transportation services or sell transportation equipment or fuel in Nebraska. Some of the transportation taxes that may apply to LLCs are:

• Motor Fuels Tax: This tax applies to the sale and distribution of motor fuels in Nebraska and is remitted to the Department of Revenue by licensed fuel suppliers and distributors.
• Motor Vehicle Sales and Use Tax: This tax is charged on motor vehicle sales, leases, or rentals in Nebraska at 5.5% of gross receipts or fair market value, collected by dealers and remitted to the Department of Revenue.

To learn more about the different types of taxes that apply in Nebraska, and how to comply with them, please visit the Nebraska Department of Revenue website.

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below, we’ve explored some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the IRS will not treat single and multi-member LLCs as separate entities from you and your partners for federal income tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income taxes on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs are responsible for paying self-employment tax on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employment Tax

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Nebraska

Below, we’ve outlined the general process an LLC in Nebraska will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in. 

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you've gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it's a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The filing deadline is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State and Local Tax Returns: Various taxes in Nebraska come with distinct filing obligations. To learn about the reporting and payment processes for each tax, please visit the Nebraska Department of Revenue website to find the right filing option.

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Nebraska LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Nebraska LLC Biennial Report

Unlike most states that file annual reports, every LLC in Nebraska must file a report every two years to keep their business in good standing with the state. 

The filing fee for the biennial report is $13, and it can be filed online through the Nebraska Secretary of State website. The report is due between January 1 and April 1 of every odd-numbered year, depending on when you initially filed your Nebraska LLC Certificate of Organization. 

If the report is not filed by the deadline, the LLC will have a grace period until June 1st to file the report without penalty. However, if the report is not filed by June 1st, the LLC will be administratively dissolved or revoked by the state, which means it will lose its legal status and protection. To reinstate the LLC, the business owner will have to file the appropriate forms and pay the fees with the state.

The state will send a reminder notice by mail to the LLC’s registered agent, but it is ultimately the responsibility of the business owner to file the report on time. 

Licensure and Tax Requirements

In Nebraska, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Licenses: If your LLC sells, leases, or rents tangible personal property or certain services in Nebraska, you must obtain a sales tax permit from the Nebraska Department of Revenue. You can apply for a sales tax permit online or by mailing in the Nebraska Tax Application (Form 20). The sales tax rate in Nebraska is 5.5%, plus any local sales taxes that may apply.
• Professional Licenses: If your LLC provides professional services that require a license or certification in Nebraska, such as insurance, real estate, accounting, or health care, you must obtain the appropriate license from the relevant board or agency. For example, real estate brokers who own a brokerage firm must have a license from the Nebraska Real Estate Commission (NREC). 
• Environmental Permits: If your LLC engages in activities that may affect the environment, such as construction, industrial operations, waste management, or fuel distribution, you may need to obtain one or more environmental permits from the Nebraska Department of Environment and Energy (NDEE).

Note: To find out what licenses and permits your LLC may need to operate in Nebraska, you can check the Nebraska.gov website, which provides links to various state and local agencies that issue business licenses.

Nebraska LLC Taxes FAQs