Business Income Tax FAQs

This guidance document is advisory in nature but is binding on the Nebraska Department of Revenue (DOR) until amended. A guidance document does not include internal procedural documents that only affect the internal operations of DOR and does not impose additional requirements or penalties on regulated parties or include confidential information or rules and regulations made in accordance with the Administrative Procedure Act. If you believe that this guidance document imposes additional requirements or penalties on regulated parties, you may request a review of the document.

This guidance document may change with updated information or added examples. DOR recommends you do not print this document. Instead, sign up for the subscription service at revenue.nebraska.gov to get updates on your topics of interest.

Nebraska imposes a corporate income tax on all corporations that earn any part of their federal taxable income from Nebraska sources. A corporation includes any entity taxed as a corporation under the I.R.C.

Nebraska does not impose its corporate income tax on:

  • Corporations that are protected from Nebraska income tax under 15 U.S. Code § 381;
  • S corporations; or
  • Financial institutions as defined in Neb. Rev. Stat. § 77-3801.

See Neb. Rev. Stat. §§ 77-2734.02, 77-2734.04, and 77-3801.

Corporations operating as a unitary group must file a single combined return to report the income of the entire group. See Neb. Rev. Stat §§ 77-2734.02 and 77-2734.04.

Special rules apply to unitary groups that include:

  • An insurance company that is subject to any Nebraska premium tax;
  • An S corporation; or
  • A financial institution as defined in Neb. Rev. Stat. § 77-3801.

A Nebraska return must be filed by all S corporations, partnerships, and LLCs with income from Nebraska sources.

Nebraska requires an LLC to file the same type of Nebraska return as the LLC is required to file with the IRS.

Federal Return Required Nebraska Return Required
U.S. Corporation Income Tax Return, Form 1120 Nebraska Corporation Income Tax Return, Form 1120N
U.S. Income Tax Return for an S Corporation, Form 1120-S Nebraska S Corporation Income Tax Return, Form 1120-SN
U.S. Return of Partnership Return, Form 1065 Nebraska Return of Partnership Income, Form 1065N

A multistate business apportions its income using only a sales factor. The sales factor is computed by dividing sales sourced to Nebraska by sales everywhere. Corporations conducting a unitary business must determine income and the sales factor using the combined income approach. See Reg-24-305, Apportionment Formula.

Nebraska net operating losses may be carried back and forward by corporate taxpayers as follows:

Loss Year 1984 - 1986

  • Carryback: 3 Tax Years
  • Carryforward: 15 Tax Years

Loss Year 1987 - 2013

  • Carryback: 0 Tax Years
  • Carryforward: 5 Tax Years

Loss Year 2014 - Present

  • Carryback: 0 Tax Years
  • Carryforward: 20 Tax Years

For additional information, see Reg-24-060, Net Operating Losses and Capital Losses.

Nebraska capital losses may be carried back and forward by a corporate taxpayer as follows:

Loss Year 1984 - 1986

  • Carryback: 3 Tax Years
  • Carryforward: 15 Tax Years

Loss Year 1987 - Present

  • Carryback: 0 Tax Years
  • Carryforward: 5 Tax Years

For additional information, see Reg-24-060, Net Operating Losses and Capital Losses.

A corporation must file an amended Nebraska return to report changes based on federal amended returns and audits. An Amended Nebraska Corporation Income Tax Return, Form 1120XN, must be filed within the following periods:

Federal amended return:

  • 60 days after federal approval of an amended return claiming an overpayment, and
  • 60 days after filing any other amended federal return.

Federal Audit:

  • 60 days after any final determination.

See Neb. Rev. Stat. § 77-2775.

A Nebraska extension of time to file a Form 1120N may be obtained by:

  • Filing a Nebraska Application for Automatic Extension of Time, Form 7004N, on or before the due date of the return;
  • Attaching a copy of a timely filed Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, Federal Form 7004, to the Nebraska return when filed;
  • Attaching a copy of the approved federal extension to the Nebraska return when filed;
  • Attaching a schedule to the Nebraska return listing the federal confirmation number and providing an explanation that the electronic request for automatic federal extension was not denied; or 
  • If a federal extension has been granted, additional time to file the Nebraska return may be obtained by filing a Form 7004N on or before the date that the federal extension expires. Attach a copy of the Federal Form 7004 or approved federal extensions to the Form 7004N when filed.

When an extension of time to file a Nebraska return is granted, interest is still due on any unpaid tax. An extension of time cannot exceed a total of seven months after the due date of the return. You can make a tentative payment to stop interest from accruing. Even if this payment is made, Form 7004N must also be filed. When filing your Form 1120N, claim the tentative payment on the line "Tax deposited with Form 7004N." See Neb. Rev. Stat. § 77‑2770.

See the information guide, "Taxability of Interest and Dividend Income from State, Local, and U.S. Government Obligations" for a current list of U.S. interest and dividend income that is exempt from state taxation.

Dividends and other income received from a regulated investment company are exempt in proportion to the extent they represent U.S. Government interest and dividend income listed above.

A deduction for U.S. Government interest and dividend income is taken on line 1 of Nebraska Schedule A, Form 1120N. For additional information, see the Nebraska Corporation Income Tax Booklet instructions.

A penalty of 5% per month (up to 25%) may be assessed on any outstanding tax liability.

Nebraska conforms to the federal due dates (Neb. Rev. Stat. § 77-2768). For most corporations the due date for the Nebraska corporation income tax return, Form 1120N, is the 15th day of the fourth month following the close of the taxable year. The due date for corporations with a fiscal year ending June 30, is the 15th day of the third month following the close of the taxable year. Due dates may vary for other entities such as cooperatives and exempt organizations.

Nebraska Corporation Income Tax Rates for 2021

  • If taxable income is over $0 but not over $100,000
    • The Nebraska Tax is 5.58% of taxable income
  • If taxable income is over $100,000
    • The Nebraska tax is $5,580 + 7.81% of the excess over $100,000.

Nebraska Corporation Income tax Rates for 2022

  • If taxable income is over $0 but not over $100,000
    • The Nebraska Tax is 5.58% of taxable income
  • If taxable income is over $100,000
    • The Nebraska tax is $5,580 + 7.50% of the excess over $100,000.

Nebraska Corporation Income Tax Rates for 2023 and beyond

  • If taxable income is over $0 but not over $100,000
    • The Nebraska Tax is 5.58% of taxable income
  • If taxable income is over $100,000
    • The Nebraska tax is $5,580 + 7.25% of the excess over $100,000.

Nebraska Fiduciary Income Tax Rates for 2021

  • If taxable income is over $0 but not over $550
    • The Nebraska tax is 2.46% of income
       
  • If taxable income is over $550 but not over $5,220
    • The Nebraska tax is $13.53 + 3.51% of the excess over $550
       
  • If taxable income is over $5,220 but not over $16,820
    • The Nebraska tax is $177.45 + 5.01% of the excess over $5,220
      ​
  • If taxable income is over $16,820
    • The Nebraska tax is $758.61 + 6.84% of the excess over $16,820

Yes. The federal tax code generally includes grants received from government programs in gross income. Nebraska follows the federal tax code. Grants received from Nebraska’s stabilization programs are included in gross income under the federal tax code, and are therefore subject to Nebraska income tax.

Nebraska established the stabilization grant programs from federal funding received from the Coronavirus Relief Fund under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Nebraska's stabilization grant programs include, but are not limited to, the Small Business Stabilization Program and the Livestock Producer Stabilization Program.

No. A forgiven PPP loan is excluded from the federal gross income of the borrower under the Consolidated Appropriations Act, 2021 (Act). Nebraska follows the IRC and this Act. As a result, forgiven PPP loans are not included in Nebraska taxable income.

Yes. Expenses paid with forgiven PPP loans are allowable deductions under the federal Consolidated Appropriations Act, 2021.

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