Updated October 4, 2026. Quick answer: No. For tax years beginning on or after January 1, 2022, a Nebraska military retiree is “allowed to exclude 100% of the military retirement benefits” included in federal adjusted gross income, entered on Schedule I, line 32.
How Nebraska treats military retired pay
| Item | What the documents say |
|---|---|
| Treatment | Exclusion of 100% of military retirement benefits included in federal adjusted gross income (Schedule I, line 32) |
| Who qualifies | All military retirees, for tax years beginning on or after January 1, 2022 |
| Paperwork | Benefits on a Form 1099-R issued by the U.S. Department of Defense or OPM qualify; for an OPM Form 1099-R, documentation from the U.S. Government must support the uniformed-service portion |
| Cap or age | None printed |
| Rate on other income | The booklet prints a top-bracket computation of $3,566 plus 5.20% of the amount over $77,760; lower brackets were not read |
A $30,000 example
A retiree with $30,000 of military retired pay in federal adjusted gross income excludes all $30,000, so none of that pay is left to tax.
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What changes in 2026
No 2026 change is printed in the documents read.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Publication 3, Armed Forces’ Tax Guide.
Related: whether Nebraska taxes pensions, how Nebraska taxes retirement income, military retirement pay by state, and the military retirement calculator.
Sources
- 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
- Nebraska Income Tax for U.S. Servicemembers Information Guide: https://revenue.nebraska.gov/sites/default/files/doc/info/8-364.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.