Sales Tax Updates in Nebraska

Tax Professionals' Resource
December 24, 2012 — 1,085 views  
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Nebraska’s state sales and use tax is 5.5%. Several cities in Nebraska, however, assess an additional city sales and use tax in 0.5% increments, but the increase cannot exceed 1.5%. For example, effective January 1, 2013, the city of Elmwood will add a local sales/use tax of .05%, making Elmwood’s new tax rate 6%. The City of Oxford will add a 1.5% increase, making Oxford’s new tax rate 7%. For a complete 2013 list of Nebraska’s cities that assess an additional tax and the current rate of each city, visit the Official Nebraska Government website at http://www.revenue.ne.gov/question/newsales.html.

Sales tax is not assessed on food and ingredients generally used to prepare at-home meals. For example, products containing “Nutrition Facts” on the label are exempt from tax. Food items sold through a vending machine or prepared at a restaurant, bar or concession stand, however, are taxable. Since tobacco and alcoholic beverages are not considered food or ingredients, these items are also subject to tax. For a current list of examples of taxable and non-taxable items, see the Department of Revenue’s Information Guide on the Nebraska Government website referenced above.

“Use tax” is paid when something is purchased over the internet or by mail. Nebraska law requires the buyer to pay the tax directly to the state if the seller does not collect sales tax. If a consumer purchases taxable items over the Internet such as digital equipment, movies, videos, and books and does not pay Nebraska sales tax, the state and local consumer’s tax must be reported and paid using the Nebraska and Local Individual Consumer’s Use Tax Return, Form 3 which can be found on the Nebraska Government website. Likewise, if a consumer purchases a taxable item through a home shopping network or mail catalogue and is not charged the state tax, he has to report the state and local sales tax rate of the city where he resides. For example, a consumer purchases a printer from a seller in Texas over the Internet for $600 plus $20 shipping/handling charges. The printer is shipped to Oxford, Nebraska and the seller did not charge or collect any tax from the buyer. The buyer’s state tax (5.5%) plus the local tax for the city Oxford (1.5%) is owed which totals $42 ($600 x .07 = $42). This amount is to be reported on Form 3, listed above.

For any other information regarding sales/use tax for the state of Nebraska, visit the Official Nebraska Government website at http://www.revenue.ne.gov.

 

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