10 Nebraska Property Tax Laws That You Need to Know Before Selling

A lawyer and a client discuss Nebraska property tax laws.

Nebraska property owners looking to sell their homes should learn more about Nebraska property tax laws, such as the Nebraska Advantage Act, the homestead exemption, and other tax exemptions. For instance, you may want to discover the laws the legislature passes to set property tax rates in the state of Nebraska.

You will need to know how much your yearly property tax is and how much you have to pay as prorated property taxes before you sell your place to a new buyer. Read on to learn all about Nebraska property tax laws, property tax relief in the state, property tax programs, and the tax bill of rights for taxpayers.

Nebraska Property Tax Laws

Home buyers and sellers will need to account for the local school districts to determine property valuation and real estate property taxes. The state of Nebraska also provides tax credit refunds for the paid school district and community college property taxes.

Every credit gets based on the percentage multiplied by the community college or school district taxes paid. Tax collections get based on the credit percentage, which the Nebraska Department of Revenue (DOR) calculates in the last quarter of every calendar year.

As of 2022, an individual can claim the school district and community college tax credits by filing a Nebraska tax return with a Nebraska Property Tax Credit (also known as Form PTC).

The local governments and elected officials in each Nebraska town determine property tax rates using the market value of different homes and commercial properties. Each county treasurer is responsible for collecting tax revenue from property owners based on Nebraska law. Also, the county assessor determines the property tax rate. 

Only local governments can levy property taxes. Depending on the Nebraska town, some homeowners may see a property tax increase during certain periods. In 1966, the state government got banned from levying property taxes due to a fortunate petition.

The tax levied on a property is based on the market value of the residential area. However, agricultural land was historically determined at 80 percent of the actual value, while other properties get assessed at 100 percent of the value.

The Nebraska Advantage Act also provides a property tax incentive for property owners residing in a school district. Individuals, organizations, financial institutions, and C corporations exempt from income tax can file for these tax incentives. These are a few of the property tax laws to consider in the state of Nebraska. 

Lincoln NE Tax Laws

The average effective property tax rate people pay in Lincoln, Nebraska, is 1.76 percent, while the median home value is $135,700. Lincoln is the state capital and part of Lancaster County. The county treasurer in Lancaster County is responsible for collecting property taxes and dividing the funds between cities, villages, schools, fire stations, and more.

The tax rates for taxpayers in Lincoln reached 15.74 percent, while those in Lancaster county as a whole reached 13.12 percent. Specifically for property taxes, residents can pay those electronically through their bank or another payment platform.

Generally, Nebraska is ranked 17th out of 50 states for the average amount of property tax rates and tax revenue collected. The median property tax revenue in Nebraska reached $2,164.00 per year, while the median value of a house hit $123,300 in the state.

The average property tax rate is based on fair market value and reaches 1.76 percent. Furthermore, the median income of Nebraskans is $59,730 per year, and Nebraska is the 14th state out of 50 states when considering property taxes based on median income.

Sarpy County collects the most considerable amount of property taxes in the state at an average amount of $3,281. Grant County, on the other hand, has the lowest property tax in Nebraska at an average tax of $800 per year. 

The property tax rate in Nemaha, Nebraska, is 1.54 percent, while the tax rate drops to 1.1 percent in Hamilton, Nebraska. The home value growth also ranges greatly, as Pierce, Nebraska, is seeing a 28.48 percent growth while Red Willow experienced a 52.94 percent increase. 

The most important part of the property tax state law for homeowners is the potential for property tax relief when facing a significant tax burden. In this guide to property tax in NE, we detail tax relief and exemptions for a taxable value below.

Nebraska Property Tax Relief

Nebraska’s politicians have put together new tax relief provisions for 2023. In 2023, taxpayers in Nebraska can claim a 30 percent tax credit back for the property taxes they covered to fund their residential schools and community colleges. Nebraska homeowners need to claim that 30 percent tax credit in their income tax returns in 2023. 

The state government passed the new property tax relief law in April 2022. Taxpayers can even re-file their previous tax returns to get that credit again. These property tax relief programs will ensure taxpayers can obtain a check in the mail as a refund for high taxes they’ve paid in the past.

In fact, the new property tax relief law will provide a total of $3.4 billion in tax relief to Nebraska’s property owners through 2027. That amounts to 12 times as much tax relief as in any previous bill in Nebraska. 

Keep reading to learn about several other property tax programs in the state. 

Nebraska Property Tax Programs

Taxpayers who have paid property taxes toward schools are eligible for getting a refund through a tax credit on their income tax return. For instance, in 2021, the credit amounted to 25.3 percent of property taxes that got paid to schools and community colleges.

The credit applies to real estate property like residences, land, and other buildings. However, taxes levied for bond repayments exclude credit payments. 

To receive the benefits of an important property tax program and tax credit in Nebraska, homeowners must apply for relevant programs they qualify for. 

For example, the Nebraska Property Tax Incentive Act credit on an individual income tax return may amount to more than $600 in a tax credit. Homeowners will need to claim that tax credit on line 36 that appears on the Nebraska Individual Income Tax Return. 

It accounts for another tax rebate that homeowners can get after paying a property tax for a local school district. The Nebraska Property Tax Incentive Act credit has been around since 2020. 

Below, you can learn more about those responsible for passing tax laws and collecting tax revenue.

A lawyer reviews Nebraska property tax laws.

Who Is Responsible for Setting Taxes

When considering federal taxation processes, the U.S. Constitution authorizes in the Taxing and Spending Clause located in Article I, Section 8, Clause 1 that Congress can levy taxes on property owners and residents in the United States. 

The Constitution also specifies two reasons for taxation, which include paying off debt from the federal government and paying for the common defense.

Essentially, Congress determines the spending of various fiscal policies and passes important laws to set federal taxes. The House of Representatives and the Senate work together to deliberate and approve certain measures and laws.

Taxpayers also need to cover the taxes present in their state. Nebraska residents pay taxes that the Nebraska Legislature set up. The Department of Revenue in the state is responsible for collecting taxes while state officials pass laws to levy taxes or provide tax relief programs.

The county assessor in each Nebraska county is responsible for determining the value of each home. Each county sets up its own property tax rate to fund its schools and other public services.

What Are Your Tax Rights

The taxpayer Bill of Rights from the Internal Revenue Service (IRS) includes the following factors:

  • The right to get informed
  • The right to privacy
  • The right to a fair and just tax system
  • The right to retain privacy
  • The right to finality
  • The right to confidentiality
  • The right to retain representation
  • The right to quality service
  • The right to pay no more than the correct tax amount
  • The right to challenge the IRS’s position and get heard

The taxpayer bill of rights comes from national taxpayer advocate Nina Olson, and the IRS adopted these taxpayer rights in 2014. All taxpayers who deal with the IRS have the above ten rights in the United States. These ten fundamental rights ensure taxpayers get treated fairly.

Conclusion

Nebraska property tax laws are essential to follow when selling a house. Buyers will need to assess property values and tax rates to determine if they can afford the real property. You will also need to ensure that any house you buy does not have a tax lien and that you cover all property taxes. 

Essentially, selling house in tax lien means you may have trouble finding home buyers. As such, the best option is to search for cash home buyers in Nebraska. Want to sell a house fast in Omaha? Cash home-buying companies can quickly buy properties in their as-is conditions.

We buy houses Lincoln locals adore, so contact us today!

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