Capital gains tax in Nebraska (2026): selling a business, real estate or farm

The employer stock election most sellers have never heard of

Nebraska has no general capital gains break, but it has an unusual one for employees. Under Neb. Rev. Stat. 77-2715.09, a resident individual may elect to subtract from federal adjusted gross income the capital gain from selling capital stock of a corporation that was acquired on account of employment by that corporation, or while employed by it. Extraordinary dividends on that stock qualify too.

The rules on Form 4797N (2025) are strict:

• One election per lifetime, for one corporation. It then covers later sales of that company's qualifying stock, and stock of a parent or subsidiary.
• Qualified corporation: at the first sale, in existence and doing business in Nebraska at least three years, at least five shareholders, and no single shareholder or related group holding more than 90% (Form 4797N, 2025). Each member of a qualified ESOP counts as a shareholder; publicly traded companies meet the ownership tests.
• Not qualified: stock bought as an outside investor, stock received for services by a non-employee, and inherited stock.
• Family reach: the election follows stock gifted to a spouse, children or a trust for them, and a surviving spouse or the oldest surviving child can make it if the employee died without electing.

The annual cap and how the excess carries forward

Form 4797N limits each year's exclusion. Line 6 caps it at the federal net capital gain on Form 1040 line 7a plus $3,000 ($1,500 married filing separately) for the 2025 form. Any excess becomes a capital gains exclusion deferred to the next year (line 8). In practice, a large employee-shareholder sale with no offsetting losses is fully covered; a seller with big capital losses elsewhere in the same year may have to carry part of the benefit forward.

This election pairs naturally with an ESOP and Section 1042 plan for a Nebraska company owned by employees, and with the federal Section 1202 exclusion where the company is a qualifying C corporation. Founders who bought their stock as investors, rather than receiving it through employment, should check the non-qualified stock list on Form 4797N before assuming it applies.

Everyone else: 4.55% now, 3.99% next year

For sellers without qualifying employer stock, gain is ordinary Nebraska income. LB 754 set the top rate at 4.55% for taxable years beginning in 2026 and 3.99% from January 1, 2027 (Neb. Rev. Stat. 77-2715.03). On the 2026 estimated tax schedule, 4.55% applies above $49,530 of joint taxable income and $24,760 single, so nearly all of a large gain is taxed at the top rate.

That scheduled cut gives sellers a clean timing lever. In the worked example, moving a December 2026 closing into January 2027 lowers Nebraska tax from $77,350 to $67,830, a $9,520 difference on one deal. For a contract already signed, a year-end timing review or an installment sale that pushes most payments into 2027 and later can capture the lower rate.

Farms, ranches and rental property

Nebraska has no separate rate for land, so a farm, feedlot or rental building is taxed at the same 4.55% for 2026 as wages. Nebraska starts from federal adjusted gross income, which means a 1031 exchange defers the Nebraska tax along with the federal tax, and a farm installment sale spreads it into 3.99% years without a Section 453A interest charge, since farm property is exempt under IRC 453A(b)(3)(B). For the federal side (20% above $613,700 of joint taxable income, Rev. Proc. 2025-32, 2026, plus 25% on unrecaptured Section 1250 gain), see how long-term capital gains are taxed and the rental property installment sale.

The seller also pays the documentary stamp tax. Neb. Rev. Stat. 76-901 imposes it on the grantor at $3.32 per $1,000 of value for transfers before January 1, 2032, dropping to $2.32 per $1,000 after that.

The county inheritance tax changes the hold-or-sell math

Nebraska is one of the few states with an inheritance tax, collected by the county. For deaths on or after January 1, 2023 (Neb. Rev. Stat. 77-2004 to 77-2006):

• Parents, children, siblings, grandchildren and other lineal descendants: 1% of what each person receives above $100,000 (77-2004).
• Remote relatives such as aunts, uncles, nieces and nephews: 11% above $40,000 (77-2005).
• Everyone else: 15% above $25,000 (77-2006).

Holding a farm or building until death gives heirs a federal step-up in basis that erases the 4.55% (2026) income tax on built-in gain, while children pay only 1% inheritance tax over $100,000 each. For a nephew or a long-time employee, the 11% or 15% rate can exceed the income tax a sale would have cost. Get the Big Sale Tax Analysis to model sale, note and hold in one comparison.

Moving before a Nebraska sale

Gain on Nebraska real estate stays Nebraska income for a nonresident, so moving to South Dakota or Wyoming does not help with land. Gain on corporate stock generally follows domicile, which makes a well-documented move before selling shares worth modeling, though the employer stock election above is available only to residents. The residency change analysis explains what a move must look like to hold up.

Run your own numbers

Frequently asked questions