Updated October 29, 2026. Quick answer: Partly, and only for CSRS. The 2025 booklet “limited to annuities received under the Civil Service Retirement System” and says the subtraction “does not apply to annuities received under the Federal Employees Retirement” System.
What Nebraska does with a FERS or CSRS annuity
| Question | What the Nebraska documents say |
|---|---|
| What the source says | Nebraska lets a retiree subtract federal civil service annuities paid under the Civil Service Retirement System (CSRS) to the extent they are in federal adjusted gross income, but the subtraction does not apply to annuities paid under the Federal Employees Retirement System (FERS). |
| Amount or limit | Subtract CSRS annuities earned from federal employment, to the extent included in federal AGI, on Nebraska Schedule I line 38; only the CSRS portion qualifies, and no dollar cap is printed. |
| Change for 2026 | No 2026 change is printed in the state documents cited here. |
In the Nebraska documents’ own words
- “the benefits are paid out of FERS and don’t qualify.” (2025 Nebraska Individual Income Tax Booklet)
- “Only the portion paid from CSRS qualifies for this deduction.” (2025 Nebraska Individual Income Tax Booklet)
- “amounts received as annuities under the Civil Service Retirement System” (Neb. Rev. Stat. 77-2716 Adjusted gross income, modifications)
- “All military retirees are allowed to exclude 100%” (2025 Nebraska Individual Income Tax Booklet)
How this differs from other pensions in Nebraska
The statute and booklet single out CSRS annuities for a subtraction, and FERS annuities do not qualify. The booklet separately lets military retirees exclude 100% of military retirement benefits. See also Does Nebraska tax pensions? and military retirement pay.
FERS, CSRS and your TSP
The state documents cited here do not address TSP withdrawals. For the Thrift Savings Plan itself, see state tax on TSP withdrawals and the TSP calculator.
Where this rule sits on the Nebraska return
The subtraction is entered on Schedule I line 38 of the Nebraska return, and the booklet points to Neb. Rev. Stat. 77-2716 for the modification.
Checks before you rely on this answer
- Identify which system pays your annuity, because a career split between CSRS and FERS qualifies only for the CSRS part.
- Ask the Office of Personnel Management how much of your annuity is paid under CSRS if you were covered by both systems.
- Do not confuse this with the military retirement exclusion, which the booklet sets at 100%.
What the Nebraska documents leave open
No dollar cap or age test is printed for the CSRS subtraction. For a career split between the two systems the booklet allows only the part paid from CSRS. The rate schedule is a PDF table not published here, the documents do not address TSP withdrawals, and no 2026 booklet exists yet.
Common mistakes
- Subtracting a FERS annuity. The booklet says the subtraction does not apply to FERS annuities.
- Subtracting the whole annuity of a career split between systems. Only the portion paid from CSRS qualifies.
Related: Does Nebraska tax pensions?, Nebraska military retirement pay, Nebraska retirement deduction line by line, and FERS, TSP and Social Security sequencing.
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Answer againSources
- 2025 Nebraska Individual Income Tax Booklet: https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf
- Neb. Rev. Stat. 77-2716 Adjusted gross income, modifications: https://nebraskalegislature.gov/laws/statutes.php?statute=77-2716
Read from the state documents linked above on October 29, 2026. General information, not tax advice.