When you run payroll in Nebraska for the first time, there’s a lot to remember. First, Nebraska has a graduated income tax. This means that everyone pays a rate between 2.46 and 6.64%, depending on income and filing status.
Then there’s the state minimum wage of $12 an hour. And then there’s the state’s PTO payout laws to consider as you set up your benefits policies.
It’s a lot.
Here’s what you need to know.
How to Manually Run Payroll in Nebraska
Before you can run your first payroll, you need to make sure you set your business up correctly. Follow the steps below to get started on the right foot.
Step 1: Register Your Company With Nebraska
Like many other states, Nebraska has a One-Stop Business Registration Information System designed to help you get up and running. The system takes you through a quiz that asks you:
- If you’re a brand-new business
- What type of business entity you are
- What goods and/or services you’ll be selling
It’s actually a pretty straightforward yet comprehensive quiz. At the end, you get a tidy checklist of forms to fill out to get your business going. We recommend filling them out in order and keeping them in a secure place on your computer.
This is by far the easiest way to start your business in the Cornhusker State without missing any important steps.
As part of the registration process, you’ll need to register your business with the Nebraska Department of Revenue.
Unless, that is, you already have a Nebraska Tax ID and are simply hiring employees for the first time. In that case, you’d need to log on to the Department of Revenue portal with your Nebraska Tax ID and update your business information.
Step 2: Report All New Hires
All Nebraska employers must report new hires to the state within 20 days of the hire date.
So who counts as a new hire?
Anyone who’s being hired for the first time. Or anyone who’s being rehired or recalled after a period of unemployment with the company.
Nebraska also includes temporary workers, seasonal employees, and independent contractors on its new hire reporting list.
You’ll need to provide the state with the following information:
- The employer’s name, address, and Federal Employment Identification Number (FEIN)
- The employee’s name, address, Social Security Number (SSN), and hire date
You can quickly and easily report new hires online through Nebraska’s New Hire Reporting portal.
Step 3: Familiarize Yourself With State and Local Taxes
Nebraska has a complicated income tax structure that’s sure to give you a headache. The tax rates vary based on income and filing status, but they begin at 2.46% and cap at 6.64%.
Here’s the catch: that cap only applies to taxable years beginning on January 1, 2023, and ending before January 1, 2024.
In the 2024 tax year, the cap will drop to 5.84%.
For 2025, it’ll sink to 5.20%.
And so on until it reaches its goal number: 3.99% for taxable years that start on January 1, 2027.
In other words, there’s a lot of change going on with Nebraska’s already labyrinthine tax system. Make sure you check the state’s official resources pages—which we’ll link to in a second—frequently.
Like the rest of the states in the country, Nebraska requires employers to pay into an unemployment insurance fund. If you’re a brand-new business, the state requires you to pay unemployment tax at a rate of 2.5% or the average of the state’s income taxes—whichever is lower.
Most employers will pay this amount on the first $9,000 of each employee’s wages. To get set up with unemployment insurance tax payments in Nebraska, register using the Department of Labor’s NEworks site.
In addition to its income and unemployment insurance taxes, Nebraska levies a state sales tax of 5.5%. It also allows local city or county governments to charge sales taxes at rates up to 2%.
This isn’t part of payroll, though, so we won’t linger here. Just be aware that if you sell certain goods or services, you’ll need to collect and remit sales tax in Nebraska.
Step 4: Make Sure You’re Following All the Rules
Let’s set all this tax stuff aside for a moment. When you run your first payroll in Nebraska, there are several key rules and regulations you should understand.
We’ve compiled a list of resources to help you get familiar with them:
- Official Nebraska Department of Labor – Labor Law Home Page: Consider this your dashboard for all things labor-related. You’ll find links to everything here, including Nebraska’s labor standards, workplace safety rules, and minimum wage information.
- Nebraska Department of Revenue – Online Services for Businesses: You can do all the income tax-related tasks here, from filing returns to registering a business with the Nebraska Department of Revenue.
- Sales Tax Rate Finder: Use this interactive map of Nebraska to find out all the local tax rates for the state.
Now you’re ready to spend several days at your desk making sure you get every teeny tiny detail about running payroll in the Cornhusker State just right.
Or, you can skip the drama and run payroll the easy way.
How to Run Nebraska Payroll Without the Stress
Payroll software is a beautiful thing.
It can literally take in the basic details about your tax liabilities, digest them into its system, and then automate your tax duties for you.
Yes, that includes calculating how much should be withheld from each employee’s paycheck.
Yes, it includes filing returns and remitting payments to local, state, and federal governments on your behalf.
Yes, it’s almost miraculous.
Why do anything else? Honestly, just reading Gusto’s payroll tax management info page is enough to have any business owner salivating. And of course, payroll software like Gusto, BambooHR, or Intuit QuickBooks does a lot more than just manage your taxes.
It also helps you manage employee benefits, generate pay stubs, maintain records, create quarterly reports, and all that stuff people used to have to do by hand.
Get started today with one of our favorite payroll software services. Any one of them can make Nebraska payroll a snap, leaving you with plenty of time to do what you love: run your business.
