Updated October 5, 2026. Quick answer: Nebraska starts from the federal figure. A full-year resident enters federal adjusted gross income on Form 1040N, line 5, which already reflects the federal HSA deduction. For nonresidents and partial-year residents, the Department of Revenue’s 2025 individual income tax booklet lists the “Health savings account deduction” as an allowed Schedule III adjustment, “Based on a ratio of Nebraska AGI to federal AGI”. The 2026 federal HSA limits are $4,400 for self-only coverage and $8,750 for family coverage.
Nebraska HSA tax treatment at a glance
| Item | What the documents say |
|---|---|
| Contributions | Full-year residents: already in federal adjusted gross income on Form 1040N, line 5. Nonresidents and partial-year residents: an allowed Schedule III adjustment, based on a ratio of Nebraska AGI to federal AGI after Nebraska adjustments |
| Earnings | Not stated in the documents read |
| Distributions | Not stated in the documents read |
| Where it is reported | Form 1040N, line 5 (federal adjusted gross income); Schedule III, line 2 for nonresidents and partial-year residents (federal Schedule 1, line 13) |
| Federal HSA limits, 2026 | $4,400 self-only; $8,750 family |
| Source | Nebraska Department of Revenue; IRS Revenue Procedure 2025-19 |
What the Nebraska documents say
The Nebraska Department of Revenue’s 2025 individual income tax booklet has a table headed “Nebraska Adjustments Allowed”, part of its instructions for line 2 of Schedule III, the schedule nonresidents and partial-year residents complete, which goes line by line through the federal Schedule 1 adjustments. For the health savings account deduction it says the amount is allowed “Based on a ratio of Nebraska AGI to federal AGI” after Nebraska adjustments.
The table is the booklet’s section on “Adjustments as Applied to Nebraska Income”. Its other rows apply the same idea to educator expenses, self-employment tax and similar items.
Earnings, distributions and the rest
The booklet says nothing about HSA earnings or distributions, and the Nebraska statute on income (section 77-2716) read for this page does not mention HSAs, so this page cites no statute for the HSA rule.
A worked example at the 2026 family limit
An illustration, not a return: a filer with family coverage who makes the 2026 federal family limit of $8,750 as a deductible contribution would carry that federal deduction on Schedule 1, line 13; as a full-year resident it is already inside the federal adjusted gross income on Form 1040N, line 5. Only a nonresident or partial-year resident scales it on Schedule III by the ratio of Nebraska AGI to federal AGI. That is $4,350 more than the self-only limit of $4,400 would allow.
What a mover should know
Every figure on this page is Nebraska’s own rule. If you moved during the year, or live in one state and work in another, check each state’s page and return, because the documents read here describe only Nebraska and none of them settles a part-year or two-state case. The federal side is the same everywhere: see CMG’s 2026 HSA contribution limits page, and state tax on HSA contributions for the other states checked.
What the documents do not say
- The booklet read is for tax year 2025. The rule is a one-line table entry; the booklet does not explain the ratio further in the text read, does not cite a statute for it, and does not address earnings or distributions.
Common mistakes
- Deducting the full federal amount on Schedule III as a nonresident or partial-year resident without applying the ratio the table states.
- Assuming the answer for one state applies to another, or that the state answer changes the federal limits.
Related: 2026 HSA contribution limits, state tax on HSA contributions, Nebraska retirement taxes, and how Nebraska taxes 401(k) and IRA withdrawals.
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Answer againSources
- 2025 Nebraska Individual Income Tax and Amended Return Booklet: https://revenue.nebraska.gov/sites/default/files/doc/tax-forms/2025/f_Individual_Income_Tax_Booklet.pdf
- Revenue Procedure 2025-19 (Internal Revenue Service): https://www.irs.gov/pub/irs-drop/rp-25-19.pdf
Sources: the primary documents linked above, read on October 5, 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.