Nebraska Sales and Use 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.
Rates and Returns
What are the sales and use tax rates in Nebraska? Is there county or city sales and use tax in Nebraska?
The Nebraska state sales and use tax rate is 5.5%. In addition, local sales and use taxes can be set at 0.5%, 1%, 1.5%, 1.75%, or 2%.
There are provisions to impose both a city and county local sales tax (see Local Sales and Use Tax Information). Effective April 1, 2015, Dakota County imposes a county sales and use tax of 0.5%. Dakota County is currently the only county that has a a county sales and use tax.
How do I know the correct rate of sales tax to charge?
The point of delivery determines the location of the sale. The sales tax rate is calculated at the rate in effect at that location. Deliveries into a Nebraska city that imposes a local option sales tax are taxed at the state rate (5.5%), plus the applicable local rate. Deliveries into another state are not subject to Nebraska sales tax.
Services are generally taxed at the location where the service is provided to the customer. Utility services are taxed where the meter is located. Refer to Sales Tax Regulation 1-006, Retail Sale or Sale at Retail, and Local Option Sales and Use Tax Regulation 9-007, Cities – Change or Alteration of City Boundaries.
If I purchase a taxable item or service in a city that is located in a county that imposes a county sales and use tax, do I pay the state tax, city tax, AND county tax, too?
No, the county tax is only imposed on taxable sales within the boundaries of the county, but outside the city boundaries of any city that imposes a city sales tax. Taxable sales made in a city that is located in a county with a county sales tax will be subject to the state rate and the city rate only. Taxable sales made within a county that imposes a county sales tax, but outside any city limits of a city that imposes a city sales tax, will be subject to the state rate and the county rate only.
For example, a taxable purchase made in Emerson (which does not impose a local option sales tax) is subject to the state sales tax rate of 5.5%, plus the county sales tax rate of 0.5%, for a total sales tax rate of 6.0%. Please be aware that Emerson is actually located within three counties, those being Dakota, Dixon, and Thurston counties. For taxable sales made to addresses in Emerson that are also inside of Dakota County, the correct tax is 5.5% state tax and .5% county tax. The total tax would be 6%. For taxable sales made to addresses in Emerson that are not located inside of Dakota County, the correct tax rate is only the 5.5% state tax.
A taxable purchase made in South Sioux City (one of the two cities within Dakota County imposing a city sales tax) is subject to the state sales tax rate of 5.5%, plus the city sales tax rate for South Sioux City of 1.5%, for a total sales tax rate of 7.0%. No county sales tax is due on sales made within the boundaries of South Sioux City.
When will I receive my sales tax return?
DOR will not mail Form 10 to anyone who: files a combined return; is required to make electronic payments; or has e-filed the form in the past. All other taxpayers who are mailed the Form 10 should receive it around the 10th of the month following the tax period. Returns and payments are due on the 20th of the month following the tax period.
What is the penalty for late filing of a sales tax return or making a payment after the due date?
The penalty is $25, or 10% of the tax, whichever is greater.
Do I need to file a sales tax return if I have nothing to report for the tax period?
Yes, a "zero" return must be filed by the due date, even if there is no tax information to report or tax to be remitted. The taxpayer should indicate on the return that there were no taxable sales or purchases for the tax period.
Can I file one sales tax return for all my retail locations?
Any retailer filing monthly returns and engaged in business at more than one location selling property or providing services subject to sales and use tax may make application to file a combined monthly Nebraska and Local Sales and Use Tax Return, Form 10. Each sales location must hold a sales tax permit, and all licensed locations must be subject to common ownership (the same person or persons own 80% of each licensed location). To request permission to file a combined sales and use tax return, file Nebraska Combined Filing Application, Form 11.
What is use tax?
Use tax is a complement to the Nebraska sales tax. It is imposed on the storage, use, distribution, or consumption of tangible personal property and certain services purchased by the end user when Nebraska sales tax has not been paid. An example is a delivery into Nebraska from an out-of-state Internet or catalog seller. See Sales and Use Tax Regulation 1-002, Consumer's Use Tax, for additional information.
How do I report and pay use tax?
Business use tax is reported by licensed retailers on the Nebraska and Local Sales and Use Tax Return, Form 10. If the business is not a retailer, use tax is reported on the Nebraska and Local Business Use Tax Return, Form 2. Individual use tax is reported on the Nebraska Individual Income Tax Return, Form 1040N, line 38, or the Nebraska and Local Individual Use Tax Return, Form 3.
What services are taxed?
Several specific services and labor charges are taxed. See the "Frequently Asked Questions About Nebraska Sales and Use Tax on Certain Services," and the information guide "Nebraska and Local Sales Tax."
What labor charges are taxable?
Charges for production and assembly labor are taxable. Charges for repair and installation labor are taxable when the property being repaired, replaced, or installed is taxable. See Sales and Use Tax Regulation 1-082, Labor Charges.
Labor charges to install new or upgraded component parts or accessories are taxable. See our notice titled "If you install or apply tangible personal property."
For the taxability of labor charges performed on motor vehicles, see the question below, “What labor charges for work done on motor vehicles are taxable?”
Are delivery, freight, postage, shipping, handling, and other service charges for transportation of the item purchased taxable?
Except for separately stated charges for U.S. postage on direct mail, these charges are taxable whenever the item purchased is taxable and the charges are paid to the retailer of the item. See Sales and Use Tax Regulations 1-026, Finance, Carrying, Service, and Interest Charges; and 1-079, Delivery Charges.
Are computer consulting services taxable?
Charges for consultants who only provide generalized advice and who do not provide software or updates or modifications to software are sales tax exempt. Charges for services by a consultant that result in a transfer of software, whether canned or custom, are subject to sales tax including charges for programming, program development, systems analysis, software customization and modification, upgrading of software programs, and charges for installation. See Sales and Use Tax Regulation 1-088, Computer Software. You can also find more information in the Nebraska Sales and Use Tax Guide for Computer Software.
Training charges are taxable whenever paid to the seller of the software. Automatic or mandatory telephone support services that come with the transfer of software are taxable. The optional purchase of telephone support services which are separately stated are not taxable. See Sales and Use Tax Regulation 1-074, Warranties and Guarantees.
Are sales made over the Internet taxable?
Yes. Sales made by retailers via the Internet are taxed in the same manner as sales made by other retailers, including those via mail-order catalogs. If the seller is licensed to collect Nebraska sales tax, then the customer pays the sales tax to the seller. If the seller is not licensed to collect Nebraska sales tax or fails to collect the sales tax, then the customer becomes personally liable for the tax and must pay it directly to DOR as use tax. Forms are available on our website for remitting the use tax.
Exception – Sales of household goods and personal effects made on an online auction site, by an individual, are not taxable if:
- The sale is made only once per calendar year for a period of three days or less; and
- The type of property placed on the online auction site does not include anything which is similar to that sold by the individual (or any member of the individual's household) in a trade or business.
If you are a seller via the Internet, click here for more information.
What labor charges for work done on motor vehicles are taxable?
- Labor charges to install new or upgraded component parts or accessories on a motor vehicle are taxable. See our notice titled “If you install or apply tangible personal property.”
- Labor charges to paint a motor vehicle are taxable. See our notice titled “If you are engaged in motor vehicle painting.”
Labor charges to repair or replace a used, worn, or damaged part or accessory on a motor vehicle are not taxable. See our notice titled “If you provide repair or maintenance services to tangible personal property."
What machinery or equipment qualifies for the agricultural machinery and equipment sales tax exemption?
Depreciable agricultural machinery and equipment purchased for use in commercial agriculture is exempt from sales and use tax provided the purchaser properly completes and gives to the seller a Nebraska Resale or Exempt Sale Certificate, Form 13, Section B.
Machinery or equipment that is used directly in planting, tilling, harvesting, haying, fertilizing, or irrigating crops, and equipment used in raising or feeding livestock may qualify for the exemption. Refer to DOR's information guide, "Agricultural Machinery & Equipment."
Additionally, purchases of repair and replacement parts used to repair agricultural machinery and equipment used directly in commercial agriculture, that occur on or after October 1, 2014, are exempt from sales and use taxes unless sold to an Option 2 or Option 3 contractor. More information on qualifying repair and replacement parts can be found in DOR's "Agricultural Machinery & Equipment" information guide.
How do I get a refund if I paid sales tax on agricultural machinery or equipment that qualifies for the sales tax exemption?
The purchaser must complete and file a Nebraska Sales and Use Tax Refund Claim for Agricultural Machinery and Equipment Purchases or Leases, Form 7AG-1, within three years from the date of the purchase or the lease payment.
Are aircraft subject to sales or use tax?
Yes. The sale and delivery of aircraft to a purchaser in Nebraska is subject to the Nebraska and local sales or use tax unless a specific exemption applies. The local sales or use tax due is based on the address where the aircraft is hangared. See Sales and Use Tax Regulation 1-067, Aircraft and Related Services.
In addition, an aircraft which is purchased in another state and brought into Nebraska within one year of purchase, and is either regularly based within this state or has more than one-half of the aircraft’s operating hours in this state, is subject to sales or use tax in Nebraska.
Where does DOR obtain its aircraft registration information?
DOR obtains aircraft registration information from the Federal Aviation Administration and from county assessors. This information is used to verify and ensure that the appropriate state and applicable local sales or use tax has been paid.
Am I required to report use tax on my purchase of an aircraft? If so, how do I do it?
Purchasers who have not paid the Nebraska sales tax to the seller of the aircraft can resolve their use tax liability by filing a Nebraska and Local Business Use Tax Return, Form 2, or a Nebraska and Local Individual Use Tax Return, Form 3. Penalty and interest may be assessed if the tax is not timely remitted.
If you need additional information, please contact Scott Arlt at 402‑370‑3337, or call Taxpayer Assistance at 800‑742‑7474 (toll free in Nebraska or Iowa), or 402‑471‑5729.
Are "fuel surcharges" taxable?
During periods of high fuel costs, many retailers pass this cost on to their customers by including a separate line item on the invoice instead of including it in the price of the goods or services. Retailers generally call it a “fuel surcharge” or some similar description.
Taxable Fuel Surcharges. Retailers of taxable goods and services, who add fuel surcharges to the customer’s invoice, must charge sales tax on this additional charge. Fuel surcharges are considered to be part of the delivery charge or the cost of doing business. Fuel surcharges are taxable regardless of whether they are billed based on the distance traveled, as a percentage of the sale, or at a flat rate.
Non-taxable Fuel Surcharges. If the goods or services being purchased are exempt from sales tax, then the fuel surcharge is not taxable.
Are charges for web page development, maintenance, and hosting taxable?
Charges for the development and maintenance of web pages which are hosted by the developer or a third-party hosting entity are not taxable. These charges are not taxable even though the purchaser may be provided with passwords by the developer or third-party host in order to access the web page to update or delete files, create file directories, change permissions, etc.
Separately stated charges for hosting and maintenance of web pages are not taxable.
See Revenue Ruling 01-10-2 for more information.
Do I owe sales tax when I purchase a gift card which may be used to purchase digital goods, such as music and movies, over the Internet?
No. Gift cards allow purchasers to download digital goods of their choice and are sold in various denominations of money and time. As the cards are used, the selling price of the digital good, plus the applicable sales tax, is deducted from the value of the card. The provider of the digital good is responsible for the collection and remittance of the applicable sales tax. For more information, see Revenue Ruling 01‑11‑3.
Do I owe sales tax when I purchase a content or digital release card which may be used to purchase digital goods, such as music and movies, over the Internet?
Yes. Sales of “content cards” or “digital release cards” which allow purchasers to download specific digital goods are subject to tax at the time and place of purchase if the specific digital product is taxable when purchased directly. For example, the sale of a digital release card for the latest music of a specific vocalist is subject to sales tax. When the purchaser utilizes the digital code contained on the card to download the specific digital good, no sales tax is charged by the digital provider. For more information, see Revenue Ruling 01‑11‑3.
Are purchases of retail promotional deals (“deals-of-the-day”) taxable?
Retail promotional deals, sometimes referred to as “deals-of-the-day,” can include offers on everything from vacation packages to restaurant meals. Purchases of these promotional deals from advertisers, such as online businesses, local radio stations, and newspapers, are treated in the same manner as purchases of gift certificates. The payment made by the purchaser to the advertiser for the promotional “deal” is sales tax exempt.
When the promotional deal is redeemed by the customer, sales tax is first calculated on the full selling price of the taxable sale. The amount of the promotional deal is then applied to the transaction.
Example 1: A restaurant in a city with a 1.5% local sales tax contracts with an online advertiser to sell $50 promotional deals for $25. When a promotional deal is purchased, a certificate is issued to the customer. The promotional deal is redeemable on the purchase of meals. The customer orders meals with a total selling price of $70. The restaurant must calculate and collect sales tax on the full selling price of $70 before deducting the $50 value of the promotional deal as indicated on the certificate.
Sales Tax: + $4.90
Deal: - $50.00
Total Due: $24.90
Example 2: A clothing store in a city with a 1% local sales tax contracts with a radio station to sell $20 promotional deals for $10. When the promotional deal is purchased, the radio station issues a certificate to the customer. The promotional deal is redeemable for a specific article of clothing. The customer comes into the clothing store to purchase the specified article of clothing which has a selling price of $20. The clothing store must calculate and collect sales tax on the full selling price of $20 before deducting the $20 value of the promotional deal.
Article of clothing: $20.00
Sales Tax: + $1.30
Deal: - $20.00
Total Due: $1.30
Please note that the total amount due from the customer consists only of the tax calculated and collected by the clothing store on this transaction. The sales tax is still due from the customer, even if the deal certificate covers the full price of the article redeemed.
Do authorized military personnel owe use tax on purchases made from Federal commissaries and stores?
No. Purchases of property by authorized military personnel from Federal commissaries and stores are exempt from sales and use tax. However, purchases of property by authorized military personnel from private sector retailers, including purchases from Internet retailers, are subject to tax. Military personnel may owe use tax if the private sector retailer does not collect the applicable sales tax. Use tax can be reported on the Nebraska and Local Individual Use Tax Return, Form 3, or the Nebraska Individual Income Tax Return, Form 1040N.
How do I reinstate my sales tax permit?
If your account has been canceled, you can reinstate it by filing a Nebraska Change Request, Form 22, that can be mailed or faxed to DOR:
Nebraska Department of Revenue
PO Box 98903
Lincoln, NE 68509-8903
Are federal 501(c) nonprofit organizations exempt from sales tax?
The 501(c) federal status (exemption from federal income tax) does not automatically mean the nonprofit organization is exempt from Nebraska sales tax. Very few nonprofit organizations actually qualify for the sales and use tax exemption. Sales Tax Regulations 1-012, Exemptions, and 1-090, Nonprofit Organizations, identify which organizations are exempt in Nebraska. Also, refer to DOR's information guide, Nebraska Taxation of Nonprofit Organizations.