Comprehensive Guide to Payroll Taxes in Nebraska

Employers must navigate complex federal and state-specific regulations and requirements to ensure proper payroll withholding in Nebraska. This comprehensive guide outlines what the state's employers need to withhold and remit from their employees' wages, and required employer contributions such as State Unemployment Insurance and Workers’ Compensation. 

State Income Tax (SIT)

Nebraska employers are required to withhold and remit State Income Tax (SIT) from their employees working in the state. To begin withholding Nebraska income taxes, employers must first register by completing the Nebraska Tax Application Form 20, to obtain withholding certificate. You can pay the withheld amount through Nebraska’s online portal. 

In Nebraska, the rate of SIT is progressive. In 2024, it applies to single filers' income as follows:

• 2.46%: $0 - $3,900
• 3.51%: $3,900 - $23,370
• 5.01%: $23,370 - $37,670
• 5.84%: Over $37,670

Employers are required to make monthly income tax withholding deposits if over $500 was withheld during the period. These deposits must be made on or before the 15th day of the following calendar month.

For more information on paying the withholding amount, the Nebraska Department of Revenue provides various resources for businesses.

State Unemployment Insurance (SUI)

State Unemployment Insurance (SUI) is an employer-funded program that provides temporary financial support for eligible workers in Nebraska who are unemployed through no fault of their own.

Employers must pay SUI on a taxable base wage of $9,000 per employee. A higher taxable wage of $24,000 applies for negatively rated employers. In 2024, the new employer rate for a non-construction employer is 1.25%, and the new employer rate for a construction employer is 5.40%. The rate of SUI for established employers varies between 0% to 5.4%.

As an employer in Nebraska, you're required to file and pay SUI quarterly. You can manage and pay your Nebraska unemployment insurance through an easy-to-use online portal.

Workers’ Compensation

Nebraska employers with one or more employees working in the state are required to supply Workers’ Compensation (WC) for their employees. WC provides financial support to employees in the case of work-related injury or illness, and also gives employers and employees legal protection.

You can purchase a Workers’ Compensation Insurance policy from a private insurer licensed by The Nebraska Department of Insurance, such as the Nebraska Workers Compensation Insurance Plan (NWCIP). Alternatively, you can apply to self-insure with the Nebraska Workers’ Compensation Court, subject to certain requirements.

Penalties for failure to provide Workers’ Compensation Insurance include:

• A civil fine of up to $1,000.00 for each violation, with each day of non-compliance considered a separate violation
• imprisonment for up to one year and/ or a $1,000.00 fine, if criminal charges apply
• A possible injunction prohibiting you from doing business in Nebraska until compliance is secured, in addition to the civil fine
• An injured employee may sue an employer for damages in district court, and you employer may lose your common law defenses

Simplify US payroll tax compliance with Deel

While this guide provides essential information on Nebraska payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel. 

Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.