Nebraska State Business Income Tax
Most states within the United States tax an array of businesses that make their profits from the state. However, according to strict rules, Nebraska businesses are taxed based on the nature of the business which is dependent on the legal form. As such, most of the corporations within the states are taxed based on corporate income tax while others like sole proprietorships, partnerships, and LLCs are taxed based on their personal income.
It should be noted that the taxes associated with both personal income and corporate income are not the same for each state. In the case of corporate rates, these tend to be rather flat and are independent of the income generated. For most, corporate rates usually range from anywhere between 4% and 10%.
Where personal rates are concerned, these are dependent on the amount of income that is generated by companies. These usually range from 0% for small taxable amounts and 9% or more in other states. The following six states have not made any formal regulations for income taxes and companies do not have to pay them:
* South Dakota
Of those previously mentioned Washington, Ohio, Nevada, and Texas do require that some form of taxation occurs. This is usually in the form of gross tax receipts for corporations. However, five of them don’t have any personal income taxes being applied to companies. These include South Dakota, Nevada, Washington, Wyoming, Texas as well as Florida and Alaska.
Within either New Hampshire or Tennessee, persons are only taxed based on their dividend or their interest income. Along with regular taxes, some states have even imposed an entirely different form of taxation on certain businesses. Some of these are referred to as privilege tax or franchise taxes. In essence, this simply means that businesses are taxed for being allowed the have the privilege of doing business in the state.
Just like the state’s taxation method on businesses, the franchise tax is highly dependent on some parts of the legal aspects of the business. As such, franchise taxes are paid based on the entire net worth of the business or a simple flat fee that is fit. Within the state of Nebraska, business owners are required to pay a corporate income tax as well as the corporation occupation tax. The corporation business tax is one that revolves around a franchise tax.
Depending on the legal structure of your business, you may be required to pay either one, or both, or none of these taxes. If your business income flows to you then the income will be taxed based on your individual state tax returned.
Taxes For C-type Corporations In The State Of Nebraska
These are usually done according to two marginal rates. These are as follows:
* A rate of 5.58% is taxed on income up to $100000
* A rate of 7.81% is taxed on income over $100000
When it comes to filing for income tax, this is usually done on the 15th day of the fourth month after the tax year closes. If the tax year falls in line with the calendar year, then returns are scheduled for the 15th of April. It should be noted that some personal incomes have been taxed at regular marginal rated between 2.46% and 6.84%.
When it comes to S corporations and traditional corporations, the occupation tax applies in the state of Nebraska. This is better known as the biennial tax and is based on the net worth of the business. Hence, specific fees are applied and are based on the corporation’s capital stock. These taxes are graduated and fees are applied. Some of these can be anywhere from $26 for up to $10000 and more for over $100 million in capital stock.
The following are the most common types of business entities in Nebraska:
All corporations within Nebraska are subjected to corporate taxes. However, this is paid every other year to the state’s corporation occupation tax.
These corporations are usually created by forming traditional corporations. After they’re formed, a series of special forms with the IRS are filed to elect the S status. However, unlike regular corporations, S corporations are not required to pay federal income taxes.
S corporations are usually taxed based on the income that is passed on to shareholders. It should be noted that each shareholder is required to pay some form of federal tax based on the share he has in the corporation. This just simply means that S corporations run through entities.
Nebraska doesn’t require S corporations to pay taxes since they are already required to pay the corporation of occupation tax. Hence, S corporation shareholders are required to pay taxes based on their individual share of the income within the corporation.
Limited Liability Companies (LLCs)
Just like S corporations, LLCs are also passed through entities. Hence, they are not required to pay any form of federal or income taxes. It should be noted that LLCs in the state are not required to even pay the corporation occupation taxes in the state of Nebraska. However, income from the LLCs is distributed to members who are then required to pay taxes to the state.
Since LLCs are considered as partnerships, it is possible to have LLCs classifieds as corporations if the owners prefer. Only when this is done will the LLC be required to pay corporation income tax in the state.
Partnerships are not required to deal with corporation occupation tax from the state or even the occupation taxes. Hence, any income generated from the business is shared among the partners. After the income is shared, the partners are then required to pay both state and federal income taxes.
When it comes to sole proprietorships, they’re not required to pay the state’s occupation or the corporation income taxes. Any income generated from these businesses will be distributed to the owner and they’ll be required to pay individual taxes.
Note On Multi-state Businesses And Nexus
The main focus is based on businesses that are operating within the state of Nebraska only. So, if you’re conducting business in several different states, your business might have a nexus with the states. Hence, they may be required to pay a different set of taxes within those states.
If for some reason your business was formed in another state but collects revenue from Nebraska, you might be required to pay taxes in Nebraska. So, if you’re operating a business, it’s a good idea to consult with a professional in the taxation industry so that you can set things in order.