Nebraska Military Retirement Taxes 2026
NEW: 100% exemption on military retirement pay + low cost of living
🎯 Quick Summary (2026)
- ✓ Military retirement pay: 100% EXEMPT (new as of 2024!)
- ✓ VA disability: Tax-free
- ✓ Property tax: Exemptions for disabled veterans
- ✓ Cost of living: 8% below national average
- ✓ Offutt AFB: Home of STRATCOM
2026 Nebraska Tax Breakdown
🎉 100% EXEMPT from State Income Tax!
Starting in 2024, Nebraska fully exempts ALL military retirement pay from state income tax. This is a major improvement from the previous partial exemption. Your entire military pension is tax-free at the state level.
Property Tax Relief
Nebraska offers property tax credits for disabled veterans:
- • 100% disabled veterans: Up to $4,500 property tax credit annually
- • 70-99% disabled: Partial property tax credits available
- • Homestead exemption: Additional $40,000 exemption for those 65+
Cost of Living in Nebraska
Nebraska's cost of living is 8% below the national average:
📍 Housing
Median home: $230,000
Rent (2BR): $1,100/month
Property tax: Moderate (~1.5%)
🛒 Living Costs
Groceries: Below average
Healthcare: Below average
Utilities: Below average
Military Installations
✈️ Offutt Air Force Base (Bellevue)
• Home of US Strategic Command (STRATCOM)
• 55th Wing (reconnaissance)
• 10,000+ military/civilian personnel
• Full commissary and exchange facilities
🎖️ Nebraska National Guard
• Camp Ashland Joint Forces Training Center
• Multiple armories statewide
• Strong Guard presence
Best Cities for Military Retirees
🏙️ Omaha
Why: Near Offutt AFB, low unemployment, Fortune 500 companies, excellent healthcare, growing tech scene
Housing: $245,000 median
Population: 480,000+
🎓 Lincoln (Capital)
Why: University of Nebraska, state capital, stable economy, affordable, young population
Housing: $260,000 median
Population: 295,000
✈️ Bellevue
Why: Offutt AFB location, military-friendly community, excellent schools, safe
Housing: $220,000 median
Population: 53,000
Pros & Cons
✅ PROS
- ✓ 100% military retirement exemption (NEW!)
- ✓ Low cost of living
- ✓ Affordable housing
- ✓ Offutt AFB access
- ✓ Low unemployment
- ✓ Safe communities
- ✓ Excellent schools
- ✓ Four distinct seasons
❌ CONS
- ✗ Cold winters (-10°F common)
- ✗ Tornado risk in spring
- ✗ Limited VA facilities
- ✗ Rural in many areas
- ✗ Sales tax (5.5-7.5%)
FAQs
Does Nebraska tax military retirement pay?
No. As of 2024, Nebraska FULLY EXEMPTS all military retirement pay from state income tax. This is a recent change that makes Nebraska significantly more attractive for military retirees.
Is Nebraska a good state for military retirees?
Yes, especially after the 2024 tax change. Nebraska offers no tax on military retirement, low cost of living, affordable housing, Offutt AFB access, safe communities, and a strong economy. The main drawbacks are cold winters and rural nature of some areas.
Does Nebraska tax Social Security?
Yes, Nebraska does tax Social Security benefits, though there are exemptions for lower-income retirees. This is one area where Nebraska is less favorable than some neighboring states.
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