Updated September 5, 2026. Quick answer: Nebraska fully exempts military retirement pay and, starting with tax year 2024, federal Civil Service Retirement System annuities, but it explicitly does not extend that federal exemption to FERS annuities, and ordinary state and local government pensions, private pensions, and IRA or 401(k) distributions have no special exemption and are taxed as regular income.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Nebraska taxes retirement income generally.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Nebraska’s income adjustment statute, Neb. Rev. Stat. 77-2716, does not list a general exemption for ordinary state or local government pensions beyond the specific military and federal Civil Service Retirement System provisions described below, so most Nebraska state and local government pension income is included in Nebraska taxable income and taxed at the state’s regular graduated rates, which top out at 4.55 percent for 2026. |
|---|---|
| Private (employer) pensions | Private employer pensions and annuities have no specific Nebraska exemption and are taxed as ordinary income at Nebraska’s regular graduated rates. |
| Federal government pensions (FERS/CSRS) | A 2024 law, LB 1317, added a full subtraction for annuities received under the federal Civil Service Retirement System, CSRS, for tax years beginning on or after January 1, 2024. The Nebraska Department of Revenue states this decreasing adjustment does not apply to annuities received under the Federal Employees Retirement System, FERS, so FERS annuities remain fully taxable as ordinary income in Nebraska. |
| Military retirement pay | For tax years beginning on or after January 1, 2022, Nebraska allows retirees to exclude 100 percent of military retirement benefit income from Nebraska taxable income, and no election or form is required to claim it. |
| IRA and 401(k)/403(b) distributions | IRA and 401(k) or 403(b) distributions have no specific Nebraska exemption and are taxed as ordinary income at Nebraska’s regular graduated rates. |
| General retirement-income exclusion | There is no general age based or dollar capped retirement income exclusion in Nebraska beyond the specific military retirement, federal Civil Service Retirement System, and Social Security provisions described here. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Nebraska has fully exempted Social Security benefits from state income tax since tax year 2024, but a companion page on this site covers Social Security taxation in detail. Social Security has its own rules in every state; see the full breakdown in how Nebraska taxes retirement income generally.
Statute and sources
Governing citation: Neb. Rev. Stat. 77-2716 (military retirement exclusion, CSRS annuity exclusion, and Social Security exclusion subsections); 2024 Neb. Laws LB 1317.
- Nebraska Department of Revenue, Military Retirement Benefits Exclusion FAQ
- Nebraska Department of Revenue, 2024 Nebraska Legislative Changes (LB 1317, CSRS annuity exclusion)
- Nebraska Legislature, Neb. Rev. Stat. 77-2716 statute text
Read September 5, 2026.
Related: how Nebraska taxes retirement income generally · does Nebraska tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.