The Lincoln, NE sales tax is 7.25% on most retail purchases, made up of Nebraska’s 5.5% state rate plus a 1.75% city rate.1Nebraska Department of Revenue. Local Sales and Use Tax Rates2Nebraska Legislature. Nebraska Code 77-2703 – Sales and Use Tax; Rate; Collection Lancaster County adds no local tax of its own, so the state and city layers are the whole picture for general shopping. Restaurant meals, hotel rooms, and rental cars carry extra city occupation taxes on top, which is why your receipt in those places shows a higher effective rate.
Nebraska updates local rates on a quarterly schedule, so if you’re planning a large purchase or setting up tax collection for a new business, it’s worth confirming the current rate on the Department of Revenue’s website.1Nebraska Department of Revenue. Local Sales and Use Tax Rates
What the 7.25% Rate Covers
The combined rate applies to most tangible personal property sold at retail: clothing, electronics, furniture, household goods, and similar items. Services tied to physical property, such as installation, repair, and maintenance, are taxed too. Utilities delivered to Lincoln addresses, including electricity, natural gas, and water, fall under the rate, as do admissions to movie theaters, concerts, and sporting events.
Digital goods generally follow the same rule as their physical versions. Downloaded music, movies, e-books, and the codes that unlock them are taxable at 7.25% in Lincoln.3Nebraska Department of Revenue. Revenue Ruling 01-11-3 Streaming video and audio services are taxable, and so is prewritten software whether you download it or buy it on a disc. Cloud-based software-as-a-service is generally not taxable in Nebraska.
Use Tax on Out-of-State Purchases
Use tax is the quiet counterpart to sales tax. If you buy something from an out-of-state seller that doesn’t charge Nebraska tax and you bring it into Lincoln to use, you owe the same 7.25% as use tax. This comes up most with online orders from smaller sellers and items picked up while traveling. Individuals self-report on their Nebraska income tax return; businesses report on their regular sales and use tax return.
What’s Exempt
Groceries for home consumption are exempt from both the state and local portions of the tax.4Nebraska Department of Revenue. Food Tax Exemptions The exemption covers food and food ingredients you take home, but not prepared food. A deli sandwich from the grocery store counter is taxable; the bread and cold cuts you buy to make one yourself are not. Vending machine purchases don’t qualify for the exemption either.
Prescription medications and certain medical equipment are also exempt. Qualifying nonprofit organizations and government agencies can purchase tax-free, but only if the organization has an Exempt Organization Certificate from the Nebraska Department of Revenue and presents a Form 13 to the seller at the time of purchase.5Nebraska Department of Revenue. Nebraska Exemption Application for Sales and Use Tax – Form 4 Without that paperwork at the register, the seller is supposed to charge the full rate.
Nebraska does not run a sales tax holiday. Some states temporarily waive tax on school supplies or clothing; Nebraska has no such program scheduled for 2026.
Meals, Hotels, and Car Rentals Cost More
Lincoln charges occupation taxes on specific business activities. The tax is technically on the business, but the cost gets passed through to customers, usually as a separate line on the receipt.
Restaurants and Bars: 9.25% Effective
Restaurants and bars pay a 2% occupation tax on gross receipts, covering all food and beverages served. Mandatory gratuities added to the bill are included.6City of Lincoln, Nebraska. Occupation Taxes Added to the 7.25% sales tax, the effective rate on a Lincoln meal is 9.25%.
Hotels: 11.25% Effective
Hotels and motels pay a 4% occupation tax on the room rate per occupied room per night.7Municipal Code. Lincoln NE Code Chapter 3.28 – Hotel Occupation Tax With sales tax, lodging effectively runs 11.25%. Short-term rentals booked through platforms like Airbnb fall under a separate 4% short-term rental occupation tax.
Car Rentals
Renting a vehicle in Lincoln triggers a 4% occupation tax on the rental rate. Any charges identified in the rental contract, not only the base daily rate, are included in the tax base.6City of Lincoln, Nebraska. Occupation Taxes
Online Sellers and Marketplaces
Out-of-state retailers must collect Lincoln’s full 7.25% on shipments to a Lincoln address once they meet Nebraska’s economic nexus threshold: more than $100,000 in Nebraska retail sales or 200 or more separate transactions in the current or prior calendar year.8Nebraska Department of Revenue. Remote Seller and Marketplace Facilitator FAQs Sales made through marketplaces count toward those thresholds.
Marketplace facilitators such as Amazon, eBay, and Etsy that meet the same thresholds must obtain a Nebraska permit and handle collection and remittance for their third-party sellers.8Nebraska Department of Revenue. Remote Seller and Marketplace Facilitator FAQs If a facilitator is already collecting on your sales, you generally won’t owe tax on the same transactions, though you may still need to register and file depending on your overall volume.
If You’re Running a Business in Lincoln
Any business selling taxable goods or services in Lincoln needs a Nebraska Sales Tax Permit before the first sale. You can register online through the Department of Revenue or submit Form 20 on paper.9Nebraska Department of Revenue. Starting a Business in Nebraska The permit is free. Once it’s issued, you’re responsible for collecting, reporting, and remitting tax on every taxable transaction.
How Often You File
The Department of Revenue assigns a filing frequency based on your annual tax liability. Under $900 a year, you file annually. From $900 to $3,000, quarterly. At $3,000 or more, monthly.10Legal Information Institute. 316 Nebraska Admin Code Ch 1 010 – The Sales and Use Tax Most Lincoln businesses with meaningful retail volume file monthly.
State returns are due by the 20th of the month following the reporting period.11Nebraska Legislature. Nebraska Code 77-2708 – Failure to File; Penalty; Deduction; Amount; Claim for Refund A monthly filer’s January return is due February 20. Filing on time lets a retailer deduct a small collection fee from the tax remitted, as compensation for the administrative work.12Nebraska Department of Revenue. Chapter 1 – Sales and Use Tax No collection fee applies to use tax or to tax paid under a direct payment permit.
City occupation tax returns for restaurants, hotels, and car rentals follow a different schedule. Those are due by the 25th of the month after the reporting period, a few days after the state deadline.6City of Lincoln, Nebraska. Occupation Taxes Mixing up the two dates is a common early stumble.
What Late Filing Costs
Filing or paying late triggers a penalty of $25 or 10% of the unpaid tax, whichever is greater.13Nebraska Department of Revenue. Nebraska Sales and Use Tax FAQs That penalty sits on top of the tax owed.
Interest also accrues on any unpaid balance. For 2025 through 2026, Nebraska charges 8% annual simple interest on delinquent tax.14Nebraska Department of Revenue. Interest Rate Assessed on State Taxes The Tax Commissioner recalculates the rate every two years based on federal short-term borrowing costs, so it can shift in later periods. Penalty and interest run together, so an unpaid balance grows quickly. A business that can’t pay in full is usually better off calling the Department of Revenue to arrange payment than letting the balance sit.