This month, we take a journey out west to Nebraska, where early settlers roamed the state. It used to be nicknamed the “Tree Planter’s State,” but was changed in 1945 to the “Cornhusker State.” Husking corn was done by hand by early settlers of course (before the invention of husking machinery). The University of Nebraska athletic team is called the Cornhuskers.
Nebraska is a Midwestern U.S. State encompassing the prairies of the Great Plains, the towering dunes of the Sandhills and the panhandle’s dramatic rock formations. Lincoln, the capital and a vibrant university town, is distinguished by its soaring state capitol. The city of Omaha is home to the Durham Museum, which honors the state’s pioneering past in a converted railroad depot.
Nebraska is the only triply landlocked state. This means to reach an ocean, gulf, or bay from Nebraska, one must always travel south through at least 3 states or provinces: Kansas, Oklahoma, and Texas to the Gulf of Mexico; north through South Dakota, North Dakota and Manitoba to the Hudson Bay; east through Missouri, Kentucky, and Virginia to the Atlantic Ocean; or west through Wyoming, Idaho, and Oregon to the Pacific Ocean.
Business Climate
Nebraska has a large agricultural sector, and is a major producer of beef, pork, corn (maze) soybeans, and sorghum. Other important economic sectors include freight transport (by rail and truck), manufacturing, telecommunications, information technology, and insurance.
Omaha is home to Berkshire Hathaway, whose chief executive officer (CEO), Warren Buffet, was ranked in March 2009 by Forbes Magazine as the second richest person in the world. The city is also home to Mutual of Omaha, InfoUSA, TD Ameritrade, West Corporation, Valmont industries, Woodmen of the World, Kiewit Corporation, Union Pacific Railroad, and Gallup.
The Union Pacific Railroad, headquartered in Omaha, was incorporated on July 1, 1862, in the wake of the Pacific Railway Act of 1862. The route of the original transcontinental railroad runs through the state.
Lincoln’s Kawasaki Motors Manufacturing is the only Kawasaki plant in the world that produces the Jet Ski, All-terrain vehicle (ATV), and Mule lines of product. The Spade Ranch, in the Sandhills, is one of Nebraska’s oldest and largest beef cattle operations.
Tax Climate
The top individual income tax rate is 6.84%, and the top corporate income tax rate is 7.81%.
Apportionment: Nebraska corporate taxpayers apportion income using a single sales factor formula.
Nebraska uses market based sourcing for general retail sales of taxable services.
Sales Tax Structure
The state sales tax rate is 5.5%. The state’s local governments also can assess sales tax, making the actual sales tax rate in Nebraska closer to 7-8%, which is the combined rate.
Sellers who lack physical presence in Nebraska and have sales into the state that exceed $100,000 or who have more than 200 transactions in the previous or current calendar year must register, collect and remit sales tax to the state. This threshold includes all retail sales made to customers in Nebraska. Exempt sales and exempt services are also included in the threshold, except resales, sublease, or subrent. This legislation went into effect on October 1, 2018.
A marketplace provider that makes or facilitates more than $100,000 in sales or 200 transactions in the state in the current or previous calendar year must collect and remit sales tax on behalf of its third-party sellers. Although marketplace sellers are relieved of the duty to collect or remit sales tax on sales made through a collecting marketplace, they still must still register with the state and report all Nebraska sales.
Nebraska is moderate in its approach to the taxation of technology products for sales tax purposes. Nebraska sales and use tax is imposed on the sale of digital audio works, digital audio visual works, digital codes, and digital books delivered electronically when delivered on tangible storage media. Prewritten and custom software that are electronically downloaded are taxable. Software-as-a-Service is exempt from taxation, as are all cloud services. How products are produced, sold and delivered is critical to determining its tax status.
Many states have annual sales tax holidays, during which certain items the state wants to promote the purchase of (like school supplies emergency preparedness supplies, or energy efficient appliances) can be purchased sales tax free. Nebraska, however, does not currently have any scheduled sales tax holidays.
Our team at Miles Consulting Group is always available to discuss the specifics of your state tax situation, whether in Nebraska or other states, we can help you navigate the complex tax structures arising from your multistate operations. Call us to help you achieve the best tax efficiencies.
Random Facts
- Kool-Aid was created in 1927 by Edwin Perkins in the city of Hastings, which celebrates the event the second weekend of every August with Kool-Aid days and Kool-Aid is the official soft drink of Nebraska.
- CliffsNotes were developed by Clifton Hughes of Rising City.
- The world’s largest train yard, Union Pacific’s Bailey Yard, is in North Platte.
- Nebraska’s Chimney Rock was the most often mentioned landmark in journal entries by travelers on the Oregon Trail.
- The Naval Ammunition Depot located in Hastings was the largest U.S. ammunition plant providing 40% of WWII’s ammunition.
- The University of Nebraska Cornhusker football team has produced more Academic All-Americans than any other Division I school.
- A unique car sculpture, called Carhenge, which replicates the large stone structure in Stonehenge, England exists in Alliance, Nebraska off of highway 59.
- The Nebraska Legislature is unlike any American legislature in that it is unicameral, meaning that its members are elected without any party affiliation and has only one legislative chamber.
