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.
More state retirement-income schedules, line by line: Nebraska Schedule I.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Nebraska tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Nebraska tax 403(b) and 457(b) withdrawals.
Drawing a pension? Whether the state withholds tax from it, from its own documents: Nebraska tax withholding on pension payments.
Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Nebraska a community property state?.
Selling your home? How the state taxes the profit, from its own tax documents: Does Nebraska tax the profit from selling your home?.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Nebraska tax withholding on IRA and 401(k) withdrawals.
Trusts have their own page: does Nebraska tax trust income.
Dividends and interest have their own page: does Nebraska tax dividends and interest.
Contributing to an HSA? How the state taxes it, from its own tax documents: Does Nebraska tax HSA contributions?.
Annuity payments have their own page: does Nebraska tax annuity income.
Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Nebraska have an estate tax?.
Saving for a child’s college? The state’s 529 break has its own page: Nebraska 529 plan tax deduction.
Military retired pay has its own page: does Nebraska tax military retirement.
Selling stocks, funds or real estate has its own page: does Nebraska tax capital gains.
Withdrawals from a 401(k) or IRA have their own page: does Nebraska tax 401(k) and IRA withdrawals.
The NPERS School Plan options and refund rules, from the system’s own handbook: Nebraska NPERS retirement decisions.
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.
The rule in the source’s own words. Nebraska Department of Revenue, 2024 legislative changes: “Under LB 1317, the decreasing adjustment does not apply to annuities received under the Federal Employees Retirement System.” (source, read October 5, 2026).
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. |
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How our partner relationships workSocial 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.
Figures verified against Neb. Rev. Stat. 77-2716 and 77-2715.03 and the Nebraska Department of Revenue military retirement FAQ and 2024 legislative changes pages on September 30, 2026.
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.