If you serve in the military or have served, Nebraska offers a strong property tax break for disabled veterans and now fully shields military retirement pay from state income tax. Nebraska draws many military families after a PCS, which is short for Permanent Change of Station, the official military move from one duty station to another, with Offutt Air Force Base anchoring the Bellevue and Omaha area as home to U.S. Strategic Command. This guide explains the main rules in plain language and points you to the state's own sources. Tax law changes, so confirm the current rules before you file.
How Nebraska Helps Disabled Veterans With Property Taxes
Nebraska's main property tax break for veterans comes through its Homestead Exemption. A homestead is your owner-occupied home and the land around it. As the Nebraska Department of Veterans' Affairs explains, the program helps qualifying homeowners, including veterans totally disabled by a service-connected accident or illness, qualified totally disabled veterans or their surviving spouses, and veterans whose home was substantially contributed to by the U.S. Department of Veterans Affairs. The VA, short for the U.S. Department of Veterans Affairs, is the federal agency that rates service-connected disabilities.
For a fully disabled veteran, this is a powerful benefit. According to the Nebraska Department of Revenue's Homestead Exemption guide, a veteran drawing compensation for a 100 percent service-connected disability can have the total actual value of the homestead exempt from property tax. In plain terms, the home's ordinary property tax can be wiped out.
No Income Limit for the 100 Percent Category
This is where Nebraska's program stands apart. Many parts of the Homestead Exemption, including the categories for seniors, are limited by household income and home value. But the Nebraska Homestead Exemption Information Guide states there are no income or home-value limits for the 100 percent service-connected disabled veteran category and certain related categories. Your income does not reduce or block the benefit, which is a meaningful difference from the state's income-tested categories.
Who Qualifies
The veteran door generally requires a 100 percent service-connected disability certified by the VA, with the certification in place on or before January 1 of the application year, and qualifying wartime service. A separate category covers a home that the VA substantially contributed to, often through a Specially Adapted Housing grant. Because the rules turn on your exact status, confirm which category fits you with your county assessor and the Department of Veterans' Affairs.
Surviving Spouses
The benefit can carry to a surviving spouse. Nebraska's program covers the surviving spouses of qualifying totally disabled veterans and the widows or widowers of veterans whose homes the VA substantially contributed to, under conditions you can confirm with the state and your county.
How It Works With Your Local Tax Bill
Property tax in Nebraska is assessed and collected at the county level, even though the Homestead Exemption is a state program. You file a Nebraska Homestead Exemption Application, Form 458, with your county assessor each year, usually between early February and June 30. Filing on time matters, because a late application can cost you the exemption for that year. The state reimburses local governments for the tax the exemption removes, so your county does not lose the revenue.
If you are weighing where to settle, our guide to the military bases in Nebraska and our Offutt Air Force Base PCS guide can help you picture the local cost of owning a home near Omaha.
Military Pay and Nebraska State Income Tax
Nebraska does have a state income tax, but it now fully protects military retirement pay. As the Nebraska Department of Revenue explains, for tax years beginning on or after January 1, 2022, military retirees may exclude 100 percent of their military retirement benefits from Nebraska taxable income. No special election or form is needed to claim the exclusion.
Other military pay is treated more typically. A Nebraska resident generally owes state income tax on regular active-duty pay, because the state taxes its residents on their income. A service member who keeps another home state and is only stationed in Nebraska is not taxed by Nebraska on military pay, under federal law. VA disability compensation is not part of your federal income, so Nebraska does not tax it either. Because rates and rules can change, confirm the current details with the Department of Revenue before you file.
A Note for Military Spouses: MSRRA
If you are a military spouse, the Military Spouse Residency Relief Act, known as MSRRA, may matter to you. MSRRA is a federal law that lets a military spouse keep a home state for tax and voting purposes even after moving on military orders. You do not automatically become a Nebraska resident just because your service member got orders here.
Under the related federal rules, a service member, the spouse, or both may choose the service member's home state, the spouse's home state, or the service member's permanent duty station for residency. Because that choice affects both states' taxes, confirm yours before you file. For the property tax exemption in this guide, what usually matters most is that you are a Nebraska resident who owns and lives in the home.
