Effective January 1, 2005, Dakota County is the only county that has imposed a county sales tax. The county tax rate is 0.5%, for a total state and county sales tax rate of 6.0%. See the next question for additional information.

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No, the county tax is only imposed on taxable sales within the boundaries of the county, but outside the city boundaries of any city that imposes a city sales tax. Sales made in a city that is located in a county that has a county sales tax will be subject to the state rate and the city rate only. Sales made within a county that imposes a county sales tax, but outside any city limits of a city that imposes a city sales tax, will be subject to the state rate and the county rate only.

For example, a taxable purchase made in Dakota City (which does not impose a local option sales tax) is subject to the state sales tax rate of 5.5%, plus the county sales tax rate of 0.5%, for a total sales tax rate of 6.0%.

A taxable purchase made in South Sioux City (one of the two cities within Dakota County imposing a local option sales tax) is subject to the state sales tax rate of 5.5%, plus the city sales tax rate for South Sioux City of 1.5%, for a total sales tax rate of 7.0%. No county sales tax is due on sales made in South Sioux City.

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How do I get a refund of sales tax paid in error?

How do I reinstate my sales tax permit?

Are federal 501(c) nonprofit organizations exempt from sales tax?

The 501(c) federal status (exemption from  federal income tax) does not automatically mean the nonprofit organization is exempt from Nebraska sales tax. Very few nonprofit organizations actually qualify for the sales and use tax exemption. Sales Tax Regulations 1-012 and 1-090 identify who is exempt in this state. Also refer to the Department's information guide, Nebraska Taxation of Nonprofit Organizations.

How do I know the correct rate of sales tax to charge?

The point of delivery determines the location of the sale. The sales tax rate is calculated at the rate in effect at that location. Deliveries into a Nebraska city that imposes a local option sales tax are taxed at the state rate (5.5%), plus the applicable local rate. Deliveries into another state are not subject to Nebraska sales tax.

Services are generally taxed at the location where the service is provided to the customer. Utility services are taxed where the meter is located. Refer to Sales Tax Regulation 1-006, and Local Option Sales and Use Tax Regulation 9-007.

To find the rate for a specific location for a sale made today, click here.

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What labor charges are taxable?

Charges for production and assembly labor are taxable. Charges for repair and installation labor are taxable when the property being repaired, replaced, or installed is taxable. See Sales and Use Tax Regulation 1-082.

For labor charges to repair agricultural equipment, please see the Department's information guides "Agricultural Machinery & Equipment" and "Well Drilling and Irrigation Industry."

Labor charges to install new or upgraded component parts or accessories are taxable. See our notice titled "If you install or apply tangible personal property."

For the taxability of labor charges performed on motor vehicles, see “What labor charges for work done on motor vehicles are taxable?”

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Are delivery, freight, postage, shipping, handling, and other service charges for transportation of the item purchased taxable?

These charges are taxable whenever the item is taxable and the charges for such items are paid to the retailer of the item (Regulations 1-026 and 1-079).

Are computer consulting services taxable?

Charges for consultants who only provide generalized advice and who do not provide software or updates or modifications to software are exempt. Charges for services by a consultant that result in a transfer of software, whether canned or custom, are subject to tax including charges for programming, program development, systems analysis, software customization and modification, upgrading of software programs, and charges for installation. See Sales and Use Tax Regulation 1-088. You can also find more information in the Nebraska Sales and Use Tax Guide for Computer Software.

Are sales made over the Internet taxable?

Yes. Sales made by retailers via the Internet are taxed in the same manner as sales made by other retailers, including those via mail-order catalogs. If the seller is licensed to collect Nebraska sales tax, then the customer pays the tax to the seller. If the seller is not licensed to collect Nebraska tax or fails to collect the tax, then the customer becomes personally liable for the tax and must pay it directly to the Department of Revenue as use tax. Forms are available on our website for remitting use tax.

Exception: Sales of household goods and personal effects made on an online auction site, by an individual, are not taxable if:

If you are a seller via the Internet, click here for more information.

What labor charges for work done on motor vehicles are taxable?

Is food taxable?

Sales of food or food ingredients which are generally for home preparation and consumption are not taxable.  Food which may be purchased exempt from tax includes cereals, eggs, fruits, meats, vegetables, milk, cooking oils, sugar, canned or bottled soft drinks, bottled water, and candy. 

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What machinery or equipment qualifies for the agricultural machinery and equipment sales tax exemption?

Depreciable agricultural machinery and equipment purchased for use in commercial agriculture is exempt from sales and use tax provided the purchaser completes and gives to the seller a Nebraska Resale or Exempt Sale Certificate, Form 13, Section B. 

Machinery or equipment that is used directly in planting, tilling, harvesting, haying, fertilizing, or irrigating crops, and equipment used in raising or feeding livestock may qualify for the exemption. Refer to the Department's information guide, Agricultural Machinery and Equipment

How do I get a refund if I paid sales tax on agricultural machinery or equipment that qualifies for the exemption?

The purchaser must complete and file a Nebraska Sales and Use Tax Refund Claim for Agricultural Machinery and Equipment Purchases or Leases, Form 7AG-1, within three years from the date of the purchase or the lease payment.

Are sales of services between related entities subject to tax?

Intercompany sales of services (companies that have at least 50% common ownership) are exempt from sales and use tax as occasional sales. (See Sales and Use Tax Regulation 1-022)

What services are taxed?

Several enumerated services and labor charges are taxed. See information guide "Nebraska and Local Sales Tax."

Are enzymes and other items used in the production of ethanol exempt from tax as ingredient and component parts of the ethanol or of distiller grains, a sub-product of the ethanol process?

Enzymes and certain other items used in the production of ethanol do not become ingredient and component parts of the finished ethanol product. The enzymes are consumed in the ethanol production process and do not pass through the physical distillation which generates the ethanol. In addition, the enzyme products similarly are not present in the distiller grains, a sub-product of the process.

Therefore, the purchase and use of the following items are taxable. Such items do not become ingredient and component parts of the finished ethanol product or distiller grains.

Yeast, Anhydrous Ammonia, Sulfuric Acid, Caustic Soda, Sodium Busulfate, Urea, Lactoside 247, Anibiotics, or MAP (monoammonium phosphate)

If you have any questions regarding the taxability of these items or other items used in the ethanol production process, please contact the Department.

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Is Diesel Exhaust Fluid (DEF) taxable?

Sales Tax:  The sale of DEF is taxable unless purchased by a common or contract carrier (carrier) that holds a valid common or contract carrier certificate of exemption issued by the Nebraska Department of Revenue.  To purchase the DEF exempt from sales tax, the carrier must complete and issue to the retailer of the DEF, a Nebraska Resale or Exempt Sale Certificate, Form 13, Section B, exempt category 2.

If the purchase of the DEF is taxable, the retailer must collect the sales tax as an item separate and distinct from the selling price of the DEF. 

Motor Fuels Tax: DEF is not blended into fuel or consumed in a vehicle’s engine and is therefore exempt from motor fuels tax.

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Are parts and labor supplied in an “after-warranty” or “goodwill” repair subject to tax?

When a manufacturer agrees to replace or repair an item after the time period for coverage under a warranty has expired as a “goodwill” or “after-warranty” repair, the transaction is separate from the original warranty.   Any charges to the manufacturer for parts and labor provided with such repairs, except for labor related to the repair of a motor vehicle, are subject to tax.

The exemption provided in Regulation 1-074.02 applies only to parts furnished under a specific warranty, the gross receipts of which were subject to tax. When the repair is performed outside the warranty period any charge made to the manufacturer for the repair parts and labor is subject to tax.

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What are the sales and use tax obligations of motor vehicle dealers related to vehicles furnished free-of-charge to educational institutions?

The motor vehicle dealer is responsible for remitting use tax based on the cost of the vehicle. Nebraska Sales and Use Tax Regulation 1-021 provides the method for calculating the tax due.

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A U.S. government (federal) employee wants to make a tax-free purchase using a government credit card without completing a Nebraska Resale or Exempt Sale Certificate, Form 13. Can this be done?

Yes. When the federal government is the direct purchaser of any taxable property, the sale is exempt. U.S. government purchasers (federal government employees) with credit cards containing the appropriate prefix and sixth digit (see chart below to determine the exempt status) may use the credit card transaction instead of completing a Nebraska Resale or Exempt Sale Certificate, Form 13 or U.S. Tax Exemption Certificate, Form SF 1094.

Federal government employees’ credit card purchases which are not centrally billed, in total, to the U.S. Government are taxable, even if the employees are reimbursed for their expenses while conducting business for the federal government.

The credit cards, listed under the Exempt columns below, have their entire balances centrally billed to the federal government (not an employee) and are therefore exempt from Nebraska sales and use tax.

The Department of the Interior uses credit cards which have an integrated billing system. This system only directly bills the United States Government for some of the purchases made with the cards, such as lodging. However, other purchases, such as meals, are billed to the employee. The Department of the Interior integrated billing system uses MasterCard prefix 5568, sixth digit 6. Purchases, made with this card, are taxable as indicated in the box labeled Taxable - Federal GSA SmartPay®2 TRAVEL credit cards.

New Federal GSA SmartPay®2 credit cards were issued to federal employees in the fall of 2008, which includes the new Integrated System credit card.

Exempt - Federal GSA SmartPay®2 PURCHASE credit cards

Exempt - Federal GSA SmartPay®2 FLEET credit cards

Exempt - Federal GSA SmartPay®2 TRAVEL credit cards

Taxable - Federal GSA SmartPay®2 TRAVEL credit cards

Please note:  Currently the Federal GSA SmartPay®2 program does not have a No. 5 in use in the sixth digit of their Purchase, Fleet, or Travel credit cards.

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A local government (state, county, or city) employee wants to make a tax-free purchase using a local government charge card. Can this be done?

No. Local government employees' charge card purchases cannot be made tax-free, even if a Nebraska Resale or Exempt Sale Certificate, Form 13, is issued. However, charges billed directly to the Nebraska exempt governmental unit that are not charged to a credit or debit card are exempt.

An exempt governmental unit may obtain a refund of tax paid on credit or debit card purchases that are billed to, and paid directly by, the exempt governmental unit and are not reimbursements to a governmental officer or employee.

When the veterinarian or veterinary technician grooms my pet, is it taxable?

Animal grooming (other than for livestock) is taxable unless a licensed veterinarian or veterinary technician grooms the animal in conjunction with medical treatment. If the grooming is not performed in conjunction with medical treatment, the charges for grooming are taxable.

Are “fuel surcharges” taxable?

Due to the current high cost of fuel, many retailers are passing this cost on to their customers by including a separate line item on the invoice instead of including it in the price of the goods or services. Retailers are calling it a “fuel surcharge” or some similar description.

Taxable Fuel Surcharges: Retailers of taxable goods and services, who add fuel surcharges to the customer’s invoice, must charge sales tax on this additional charge. Fuel surcharges are considered to be part of the delivery charge or the cost of doing business. Fuel surcharges are taxable regardless of whether they are billed based on the distance traveled, as a percentage of the sale, or at a flat rate.

Non-taxable Fuel Surcharges: If the goods or services are exempt from tax, then the fuel surcharge is not taxable.

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Are graphic design services subject to sales and use taxes?

When a graphic design is created and transferred to the customer on a tangible medium, for example: paper, CD, or thumb drive, the graphic designer must collect and remit tax on the total sales price. This type of sale represents a sale of tangible personal property. However, if a graphic design is created and transmitted electronically, the sale is not taxable.

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Are charges for Web page development, maintenance, and hosting taxable?

Charges for the development and maintenance of Web pages which are hosted by the developer or a third-party hosting entity are not taxable. Such charges are not taxable even though the purchaser may be provided with passwords by the developer or third-party host in order to access the Web page to update or delete files, create file directories, change permissions, and the like. 

Are charges for Web-based software applications taxable?

Charges by an Application Service Provider (ASP) for services that allow customers remote access to software applications via the Internet or other electronic connection are not taxable when the ASP retains title to the software. The location of the software, whether located on a server in Nebraska or on a server outside the state, does not affect this determination. The ASP is, however, responsible for paying sales or use tax on its purchases of software which reside on a server located in Nebraska.

Do I owe sales tax when I purchase a gift card which may be used to purchase digital goods, such as music and movies, over the Internet?

No. Gift cards allow purchasers to download digital goods of their choice and are sold in various denominations of money and time. As the cards are used, the selling price of the digital good, plus the applicable sales tax, is deducted from the value of the card. The provider of the digital good is responsible for the collection and remittance of the applicable sales tax. For more information, see Revenue Ruling 01-11-3.

Do I owe sales tax when I purchase a content or digital release card which may be used to purchase digital goods, such as music and movies, over the Internet?

Yes. Sales of “content cards” or “digital release cards” which allow purchasers to download specific digital goods are subject to tax at the time and place of purchase if the specific digital product is taxable when purchased directly. For example, the sale of a digital release card for the latest music of a specific vocalist is subject to tax. When the purchaser utilizes the digital code contained on the card to download the specific digital good, no sales tax is charged by the digital provider. For more information, see Revenue Ruling 01-11-3.

What is "advertising and promotional direct mail?"

Advertising and promotional direct mail is printed material intended to attract attention to a product, person, or business in an attempt to sell, popularize, or secure financial support.

What sales tax rate applies to sales of "advertising and promotional direct mail?"

Sales of the printing and delivery of advertising and promotional direct mail are subject to sales tax at the rate imposed by the locations where the materials are delivered. Purchasers of these materials may provide the retailer with a summary of the delivery locations, and reasonably allocate the total based on the sales volume in each jurisdiction, the number of customers in each jurisdiction, or another reasonable allocation method. The retailer of the direct mail will collect tax according to the allocation. No further sales or use tax is due.

Example 1: A printer produces 5,000 advertising flyers and is responsible for delivering the flyers to addresses on a mailing list provided by the purchaser. 500 flyers are delivered to addresses within Nebraska. The selling price of the 500 flyers can be allocated to the specific jurisdictions within Nebraska where the flyers are distributed based upon the percentage of the population in each jurisdiction to the total population of all jurisdictions where the flyers are distributed.

If the purchaser does not provide the retailer with the relevant delivery information, a direct payment permit, or an exemption certificate, the retailer will collect sales tax for the entire print job based on the shipping point. When sales tax is paid based upon the shipping point, the purchaser remains liable for use tax based on the addresses to which the advertising and promotional direct mail is delivered.

Example 2: A printer produces 5,000 advertising flyers. The printer does not receive a direct payment permit, exemption certificate, or delivery information from the purchaser. Therefore, the printer must collect tax based upon the address from which the materials are shipped. However, the purchaser remains liable for the use tax based on the addresses to which the materials are delivered.

What is "other direct mail?"

“Other direct mail” includes only the printing and delivery of materials, such as invoices, statements, newsletters, etc. Other direct mail does not include the development of billing information or data processing services.

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What sales tax rate applies to sales of "other direct mail?"

If the purchaser of other direct mail does not provide the retailer with a direct payment permit or an exemption certificate, the retailer must collect sales tax at the tax rate imposed at the purchaser's address. The purchaser, however, remains liable for use tax based on the addresses to which the other direct mail is delivered.

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Are purchases of retail promotional deals (“deals-of-the-day”) taxable?

Retail promotional deals, sometimes referred to as “deals-of-the-day,” can include offers on everything from vacation packages to restaurant meals. Purchases of these promotional deals from advertisers, such as online businesses, local radio stations, and newspapers, are treated in the same manner as purchases of gift certificates. The payment made by the purchaser to the advertiser for the promotional “deal” is sales tax exempt. 

When the promotional deal is redeemed by the customer, sales tax is first calculated on the full selling price of the taxable sale. The amount of the promotional deal is then applied to the transaction.  

Is insulin for human use exempt from sales and use tax?

Yes.  Insulin for human use (with or without a prescription) is sales tax exempt.

Are drugs exempt from sales and use tax?

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