For investors, business owners, and high-income earners in Nebraska, understanding the state’s capital gains tax rules is essential for effective planning. Nebraska taxes capital gains as ordinary income, but it offers a valuable capital gains exclusion for qualifying stock sales—significantly reducing or eliminating state tax in certain scenarios.
What Are Capital Gains?
Capital gains are the profits earned when selling assets such as stocks, real estate, crypto, or business interests.
Only realized gains—those triggered by a sale—are taxable. Unrealized gains are not taxed.
Short-Term vs. Long-Term Capital Gains
- Short-term gains: Assets held one year or less; taxed as ordinary income.
- Long-term gains: Assets held more than one year; taxed at lower federal rates.
Nebraska taxes both categories as ordinary income unless a special exclusion applies.
Federal Capital Gains Tax (2025)
Short-Term Capital Gains
Taxed based on federal income tax brackets:
| Taxable Income (Single) | Taxable Income (Married Joint) | Rate |
|---|---|---|
| $0 to $11,925 | $0 to $23,850 | 10% |
| $11,925 to $48,475 | $23,850 to $96,950 | 12% |
| $48,475 to $103,350 | $96,950 to $206,700 | 22% |
| $103,350 to $197,300 | $206,700 to $394,600 | 24% |
| $197,300 to $250,525 | $394,600 to $501,050 | 32% |
| $250,525 to $626,350 | $501,050 to $751,600 | 35% |
| $626,350+ | $751,600+ | 37% |
Long-Term Capital Gains
| Taxable Income (Single) | Taxable Income (Married Joint) | Rate |
|---|---|---|
| $0 to $48,350 | $0 to $96,700 | 0% |
| $48,350 to $533,400 | $96,700 to $600,050 | 15% |
| $533,400+ | $600,050+ | 20% |
Additional federal considerations:
- Collectibles: up to 28%
- Real estate depreciation recapture: 25%
- Net Investment Income Tax (NIIT): Additional 3.8% on income above $200,000 (single) or $250,000 (joint)
Nebraska Capital Gains Tax in 2025
Nebraska taxes capital gains as ordinary income unless a specific exclusion applies.
Nebraska Income Tax Rates (2025)
Nebraska continues phasing in multi-year tax reductions:
- 2.46%
- 3.51%
- 5.01%
- 5.84% (top rate)
Most taxpayers with capital gains fall into the 5.01%–5.84% effective range.
Nebraska’s 100% Capital Gains Exclusion (Neb. Rev. Stat. § 77-2715.08)
Nebraska provides a significant benefit:
Full state capital gains exclusion applies if:
- You sell stock in a Nebraska-based C-corporation,
- Acquired while employed by the company or while living/working in Nebraska,
- Held for five years or more,
- Corporation has five or more Nebraska employees,
- The sale is of stock only (not LLC units, not asset sales).
If all criteria are met, state capital gains tax becomes 0%.
Not eligible for exclusion:
- LLC or partnership interests
- Publicly traded stock
- Real estate
- Asset sales rather than stock sales
A Certificate of Exclusion must be filed with your tax return.
Case Study: Nebraska Capital Gains Example
Scenario:
Ethan, a Nebraska resident, bought 5,000 shares of public stock at $40 per share in 2019 and sells them for $90 in 2025.
Total gain:
5,000 × $50 = $250,000
Federal Tax
- Long-term capital gains tax (15%): $37,500
- NIIT on $50,000: $1,900
- Total federal tax: $39,400
Nebraska Tax
Because the stock is publicly traded, the exclusion does not apply.
- Nebraska tax at 5.84%:
$250,000 × 5.84% = $14,600
Total Tax Liability
- Federal: $39,400
- State: $14,600
- Total: $54,000
Strategies to Reduce Capital Gains Taxes
1. Maximize Nebraska’s Stock Exclusion
Plan ahead when investing in Nebraska-based corporations.
2. Harvest Tax Losses
Use market downturns to offset gains with capital losses.
3. Use Retirement Accounts
Traditional IRAs and 401(k)s reduce taxable income.
4. Explore Opportunity Zones
Nebraska has designated zones offering deferral and potential exclusion.
5. Consider Charitable Structures
CRTs and donor-advised funds avoid immediate capital gains recognition.
6. Time Asset Sales Carefully
Selling in a lower-income year can reduce both federal and state tax impact.
Nebraska’s system is straightforward, but the state’s 100% capital gains exclusion for qualifying C-corporation stock is a powerful planning opportunity. With careful structuring—through timing, loss harvesting, retirement contributions, and charitable strategies—Nebraska investors can meaningfully reduce their 2025 tax obligations.