Updated October 16, 2026. Quick answer: Nebraska’s 2025 booklet starts from federal adjusted gross income and describes “retirement income (such as 401K distributions, pensions, etc.)” as income included there; it lists no IRA subtraction and does not mention inherited accounts.
Nebraska at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income; no IRA subtraction found in the documents read |
| Do the state’s documents address beneficiaries? | Not addressed: the documents read do not mention inherited accounts |
| Retirement exclusion or credit | None found for IRA distributions; the retirement-related adjustment lines cover military retirement, Railroad Retirement Board benefits and Civil Service Retirement System annuities |
| Rate in the documents read | Top rate 5.20% for 2025; 4.55% for 2026 under statute |
| State inheritance or estate tax | Not mentioned in the documents read; see CMG’s Nebraska inheritance tax page |
| Changed for 2026? | Neb. Rev. Stat. 77-2715.03 prints 4.55% for 2026 and 3.99% from January 1, 2027 |
What the Nebraska documents say
The booklet says, for 2025, “the highest rate for Nebraska taxable income is reduced to 5.20%”. Its adjustment lines for retirement benefits cover military retirement, Railroad Retirement Board benefits and Civil Service Retirement System annuities, not IRA distributions.
Neb. Rev. Stat. 77-2715.03 sets the top rate (rate four) at 4.55% for taxable years beginning on or after January 1, 2026, and 3.99% from January 1, 2027.
The federal 10-year rule and your Nebraska tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Nebraska’s own death taxes, see Nebraska inheritance tax.
What the documents do not say
- The documents read do not mention inherited accounts or beneficiaries of retirement accounts.
- No line for IRA or inherited-IRA distributions was found in the booklet.
- They say nothing about a deduction or credit for estate tax or income in respect of a decedent.
Common mistakes
- Assuming Nebraska’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Nebraska preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Nebraska taxes 401(k) and IRA withdrawals, Nebraska retirement taxes, Nebraska inheritance tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Nebraska Individual Income Tax and Amended Return Booklet (Form 1040N instructions): https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf
- Neb. Rev. Stat. 77-2715.03 Individual income tax brackets and rates: https://nebraskalegislature.gov/laws/statutes.php?statute=77-2715.03
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.