Taxes in Nebraska > Sources of Major State and Local Taxes > Property Taxes > Nebraska Property Tax History and Program Description


A. History - The property tax has been a feature of governmental fiscal programs throughout most of recorded history. The ancient Greeks were probably among the first to impose the tax. In 596 B.C., a land tax on gross agricultural produce was levied in Athens. By 378 B.C., the tax was a general property tax imposed on cattle, furniture, money, land, and houses. In Europe, early taxes were imposed on land, then buildings, then cattle and, finally, other property.

As early as the 17th Century, issues regarding the property tax were documented. Discovering, valuing, and determining what actually constitutes property became focal points in property tax debate. This is still true today. Administration of the tax became better by the 19th Century, but also more problems were found. Intangible and tangible property increased from year to year, but much of it was concealed from taxing authorities.

The Territorial Legislature of Nebraska adopted a property tax in 1857, and it became the major source of both state and local operating revenue.

The burden of property taxes grew as public service needs increased. In 1966, the voters adopted a constitutional amendment placed on the ballot through initiative petition that abolished property tax as state revenue source (commonly referred to as the Duis amendment). The tax base for most local units of government has remained primarily property taxes, while state government now must depend mostly upon sales and income for its revenue.

In 1967, the tax on intangible property and household goods was eliminated. Then, as now, property taxes were levied mostly on real estate and productive personal property.

In 1972, a major change in the property tax base took place by the partial exemption of agricultural income-producing machinery and equipment; business inventory; livestock; grain and seed; and poultry, fish and fur-bearing animals. This exemption was 12.5% for 1973 and an additional 12.5% for each of the succeeding four years. In 1977, LB 518 provided for the complete exemption of these items of commercial personal property.

In 1984, Amendment 4 was passed which allowed agricultural and horticultural land to be valued as a separate class. LB 271 (1985) provided for an income approach to valuing agricultural land. However, Banner County v. State Board of Equalization and Assessment, 226 Neb. 236, 411 NW 2d. 35 (1987) determined that separate classification as authorized by Amendment 4 did not change the requirement of uniformity and proportionality of assessment as required by NEB. CONST. Art. VIII, Section 1. The court found that LB 271 was unconstitutional.

Subsequently, Amendment 1 was placed on the ballot and passed in the 1990 general election. This amendment provides that agricultural land is a separate class of property that need not be assessed uniformly and proportionately with other classes of property but still must be uniformly and proportionately assessed within the class of agricultural land. LB 320 (1991) provided that agricultural land be assessed at 80% of actual value. LB 968 reduced this to 75%, beginning in 2007.

1998 saw the imposition of overall levy caps designed to provide an absolute maximum property tax levy by LB 1114 (1996).

LB 1114 (1996) Levy Caps




School Districts & Multi-School Systems



Community Colleges


.07 (2000)

Natural Resources Districts



Educational Service Units



County - Direct



County - Allocated



County - Cooperative






Municipal - Cooperative



Sanitary Improvement Districts







The levy caps do not apply to levies to pay off bonds issued by the government or any lease-purchase agreement entered into prior to July 1, 1998. Voters may override the limits for up to five years. The totals shown are maximums and recognize that no property can be in a municipality and an SID simultaneously. Under LB 1114, the county levy and the county allocated levy must total no more than 45 cents per $100 of value. Likewise, the city levy and city allocated levy must total no more than 45 cents per $100 of value. The levies of smaller units of government are to be allocated by the county board or city. County boards are responsible for allocating levy authority of political subdivisions for which the greatest portion of the valuation of the district is in that county.

Legislation passed in the 2002 and 2003 special sessions and the 2004 regular session allows the levies of schools and community colleges to increase to make up for the loss in state aid for FY2002-03 through FY2007-08. The FY2008-09 levy limits are to then return to the 2001 levels shown above except for schools, which are to remain at $1.05.

B. Base - The base for the property tax is assessed value of property located in the taxing jurisdiction. Assessed value is determined in different ways for each of three basic types of property: personal property, real property, and centrally assessed property.

Real property is the largest share of the tax base, comprising over 90% of the total. For assessment purposes, real property is divided into three parts: 1) ag land, sites and improvements, 2) commercial and industrial land and improvements, and 3) residential land and improvements.

Ag land, sites and improvements make up about 25% of all taxable value of real estate. Different classifications of agricultural real estate include irrigated cropland, dryland cropland, pastureland, rangeland and meadows, shelterbelts, accretion and wasteland. Agricultural and horticultural land is to be assessed at 75% of market value. (NEB. REV. STAT. Sec. 77-201.)

Commercial and industrial land, improvements, railroad and public service company real property, and mineral interests represent about 21% of the taxable real estate value in the state. Residential property represents about 54% of all taxable real property. Commercial and industrial property and residential property are to be assessed at 100% of market value.

Property tax exemptions

Exemptions from the tax base for real property are based on use and ownership. Property must be both owned by an exempt organization and used for an exempt purpose to be exempt. Exemptions include government, religious, educational, charitable, and cemetery property. Organizations owning exempt property, except for government entities, must submit applications every four years showing eligibility for exemption to county boards to retain any exemptions. In other years, the organizations need only file statements stating that the use justifying the exemption has not changed.

The cost to the state and or local governments of these exemptions is not known because no value is ever placed on exempt property. There are other exemptions for which we have more information. The homestead exemption program allows certain low-income elderly, disabled persons and veterans to avoid paying property taxes on that amount of an owner-occupied residence that does not exceed the exempt amount. The exempt amount is the lesser of $45,000 or 100% of the average home value in the county so that more relief is provided in places where housing costs are higher. The exempt amount is the greater of $50,000 or 120% of the average home value in the county for the disabled and veteran beneficiaries. Eligibility is further limited by the household income of all occupants of the home and the total value of the residence.

The state reimburses local governments for the entire cost of homestead exemptions. This program costs the state approximately $70 million.

A personal property tax exemption is provided to business qualifying under the Employment and Investment Growth Act by investing at least $10 million and employing at least 100 new employees. The exemption is for up to 15 years and is limited to turbine-powered aircraft, mainframe business computers, and business machinery used to process agricultural products. For tax year 2006, these exemptions totaled $371,448,824 in exempted value. Using the $1.95 average property tax rate to measure the value of the exemption, the associated taxes would be $7.2 million.

Household goods and personal effects, business and agricultural inventories, breeding livestock, and motor vehicles are also exempt from personal property tax, although motor vehicles are subject to a separate, uniform statewide tax described elsewhere. The cost of these exemptions is unknown.

Prior to 2001, all property owned by any governmental entity was exempt from property taxes. However, in November 1998, a constitutional amendment was approved by the voters that limited the exemption for state and local government to property used for a public purpose. Beginning in 2001, state and local government property not used for a public purpose is to be taxed at its taxable value as if owned privately. If it is leased to another entity and not used for a public, charitable, or other exempt purpose, the property is to be assessed and taxed to the lessee as if owned by that lessee. Government owned property not used for any purpose may be assessed an in lieu of tax payment in an amount necessary to pay the cost of fire and police protection, public utilities, and road and street maintenance and repair. (NEB. REV. STAT. Section 77- 202.11 and 77-202.12.)

Personal property includes such items as farm and business equipment, portable buildings, boats, motors, and airplanes, and makes up another significant portion of the tax base (7.2% of the entire taxable base, real and personal). Exemptions include items such as non-depreciable business equipment, intangible property (stocks and bonds, etc.), personal household goods, property qualifying for economic incentives under the Employment and Investment Growth Act or the Nebraska Advantage Act, and motor vehicles. Government and charitable, religious, educational, and cemetery organizations may also receive exemptions under the same conditions as for real property.

Income producing personal property is to be assessed at its net book value. This is its acquisition value less any year to year depreciation attributable to that property according to a state enacted depreciation schedule. (NEB. REV. STAT. Section 77-120.)

Centrally assessed properties include the property of public service companies, railroads, pipelines, telephone companies, and other similar entities. This property is called centrally assessed because it is assessed by the state based on the market value of the business unit. Centrally assessed real and personal property make up about 3.7% of the real and personal property base. Personal property of centrally assessed taxpayers is assessed based on net book value while the remaining value of the business is to be assessed as a unit based on its ability to produce income.

C. Rate - There are nearly 3,000 different political subdivisions in Nebraska which have authority to levy a property tax, and they overlap in a countless number of ways. The rate the taxpayer pays is the rate set by each of the political subdivisions in which the property is located added together. Beginning in 1998, LB 1114 changed this additive nature of the tax by allocating a maximum levy among the subdivisions competing for it.

Through FY2000-01, the levy for K-12 education was limited to no more than $1.10 per $100 of taxable value subject to the levy. This maximum rate declined to $1.00 per $100 of taxable value beginning in FY2001-02. Beginning with FY2003-04, school boards may increase the levy by up to 5 cents plus the amount necessary to make up for the school aid cut adopted in 2002-03 with a three-fourths vote of the school board.

Cities and counties each are limited to $0.50 per $100 and from that amount they may allocate levy rate authority to smaller, special purpose districts like fire protection districts, community development authorities, and airport authorities. Regional entities are given smaller shares. Natural resources districts may levy no more than 4.5 cents per $100, plus exceptions for groundwater management in overappropriated or fully appropriated basins. Educational service units may levy no more than 1.5 cents. Community colleges areas may levy no more than 115% of the local effort rate, or about 6.9 cents, plus an additional penny for capital expenditures, plus the amount necessary to make up the reduction in state aid for FY2003-04 through FY2007-08, with a three-fourths vote of the board. Finally, sanitary and improvement districts which are used in Nebraska to develop residential subdivisions without creating new cities are limited to 40 cents once they have been in existence for five years. (NEB. REV. STAT. Section 77-3442.)

Levies from the 2006 certificate of taxes levied shows that average county levies vary some with a statewide average levy of $1.95. That is 20% lower than it was 10 years earlier. Average levies range from $1.08 in Sioux County to $2.17 in Douglas County.

D. Administration and Disposition - The administration of the property tax in Nebraska is unusually complicated due to our populist traditions. Nearly 3,000 political subdivisions have the authority to levy property taxes to fund services ranging from very specific ones, like maintaining a cemetery or predator control, to very general ones, like cities or counties. The administration involves the merging of the process of assessing, or placing a value on each parcel of taxable property in Nebraska, and the process of developing a budget for each political subdivision which calls for some contribution from property taxation. The two processes combine to generate a property tax rate for each political subdivision. Rates are then combined for each parcel of property and multiplied by the value to determine the tax due, which is then collected mostly during the following calendar year.

The preceding paragraph presents a thumbnail sketch of the process. However, the assessment process and the rate-setting process is extremely complex and has multiple steps. Perhaps the best way to present this is by showing the property tax calendar from beginning to end.

January 1
Assessment date - This is the day for which the value of property is to be determined. In other words, property is to be assessed at the value it had on Jan. 1 of the tax year.

March 19
Assessment role must be completed by county assessor.

April 1
For the first three months of the year, the county assessor is to place a value on each parcel of real property in the county. The value is to be 100% of market value for real property, other than agricultural land, and 75% of market value for agricultural land. The county assessor is to place a value on each parcel using three basic approaches: (1) comparable sales, (2) cost (less depreciation where appropriate), and (3) income earning ability. By April 1, the abstract of these values is to be certified to the State Board of Equalization. Also on April 1, protests are due for government-owned property not used for a public purpose.

April 7-May 15
The TERC make adjustments to any class or subclass of property to assure intercounty equalization. The TERC is a four-member body created by the Legislature to hear appeals of property tax disputes in place of district courts and to replace the old State Board of Equalization and Assessment as the body that conducts intercounty equalization. The members are appointed by the Governor to staggered, six-year terms, and can only be removed for cause. Appeals from decisions of the TERC are made to the Court of Appeals for error on the record.

A class or subclass of property may be defined by any characteristic that affects value such as use, location, proximity to cities, rivers or other features, or market characteristics. The TERC is to use ratio studies provided by the Property Tax Administrator to determine if any class of property in any county should be adjusted to be more in line with the general level of assessment in the state. Generally, the level of assessment in any county is measured by examining arms-length sales of similar property in the county during the previous three years, compared with the assessed value of those properties for the year that the property sold. The assessed value divided by the sales price gives an assessment-sales ratio, which can then be averaged among all sales to generate an aggregate assessment-sales ratio. The TERC may also look at the coefficient of dispersion to measure how consistently assessed values vary from sales price and by how much, and the price-related differential that measures the relationship between such variances and the price of the property.

After examining the ratios and their statistical reliability, the Tax Equalization and Review Commission may order any county with an aggregate ratio outside the acceptable range to appear before the Commission and show cause why that class of property should not be adjusted by the board. Counties may then appear and argue that the sales sample is not representative, that property values are increasing so rapidly that the general level of assessment was acceptable on Jan. 1, or some other reason why the values should not be adjusted. The acceptable range, as set by statute and regulation of the Commission, is 92-100% for residential, and commercial and industrial property, and 74-80% for agricultural property. (NEB. REV. STAT. Sections 77-5022 and 77-5023.)

If an adjustment is to be made, the values of all properties in that county and in that class are adjusted by a percentage amount so that the general level of assessment for that class moves to the midpoint of the range after the adjustment. For example, if residential property in County A is shown to have an aggregate assessment sales ratio of 88% and the Board feels the ratio is statistically reliable and calls for an adjustment, all residential property values in the county would be increased 9.09%, resulting in a 96% ratio after adjustment.

May 1
Personal property schedules due. These are to show the acquisition cost of taxable personal property multiplied by a fraction that decreases as the age of the property increases. The depreciation schedule is set out in NEB. REV. STAT. Section 77-120.

May 15
The Tax Equalization and Review Commission recertifies the abstract back to county assessors. Any adjustments made by the Board are reflected in the recertified abstract. The rate of equalization to be applied to centrally assessed property is then determined.

June 1
County assessors send notices of the new assessed value to all property owners whose assessed value has changed for any reason.

June 15
County assessors publish statistical ratios showing the level and quality of assessment in the county. The publication is to show the assessment sales ratio and coefficient of dispersion for each class of property in the county.

June 1-30
Time period for an individual to protest the assessed value of any parcel of property to the county board of equalization.

June 1-July 25
County boards of equalization hear and act upon all protests of valuation. (NEB. REV. STAT. Section 77-1504.) Appeals from an adverse decision are to be filed with the Tax Equalization and Review Commission within 30 days. Counties with a population greater than 100,000 may act to extend the time allowed to hear protests from July 25 to Aug. 10. In such cases appeal deadlines are also extended and the county waives its right to petition the TERC for a class adjustment.

July 26
Deadline for a county board to petition the Tax Equalization and Review Commission to further adjust a class or subclass of property within a county based on findings from the hearings on individual protests. (Except in counties which have acted to extend the time for hearing protests until Aug. 10.)

August 1
Political subdivisions without independent levy authority are to request levy authority from the city or county in which the greatest portion of the valuation of the district is located.

August 10
Final action of the TERC to make any adjustments requested by the county and to certify the value of centrally assessed taxpayers to the counties. Centrally assessed property is assessed by the Property Tax Administrator based on the value of the company as a whole, apportioned to Nebraska. The value of the property within the state is then adjusted by a percentage that reflects the overall assessment level of taxable commercial and industrial property in the state. Railroads may receive an additional adjustment to reflect the percentage of the share of commercial and industrial personal property, which is exempt from tax.

After determining the taxable value of centrally assessed property of an entity in the state, the value is then distributed to counties and other political subdivisions based on where the property is located within the state.

August 20
County assessors certify to every political subdivision the taxable value available to be levied against.

September 1
Final allocation decisions by the cities and counties. These decisions cannot be reversed without the agreement of both parties.

September 10 - October 14
Political subdivisions set property tax request amounts based on budgets. If the budget calls for a contribution from the property tax that is different from the prior year, a special hearing must be held and a resolution passed to set a different amount.

September 20
Budgets for most political subdivisions are to be final.

October 10
Final day for votes to override the levy limits or local allocation decisions.

October 15
The county board certifies levies.

December 1
The county is to certify all property taxes levied to the Property Tax Administrator. Taxpayers receive notice of property taxes that will be due.

December 3
Property taxes become due and payable.

April 1
First half of property taxes become delinquent in counties with a population greater than 100,000.

May 1
First half of property taxes become delinquent in counties with a population of 100,000 or less.

August 1
Second half of property taxes become delinquent in counties with a population greater than 100,000.

September 1
Second half of property taxes become delinquent in counties with a population of 100,000 or less.