Nebraska Sales Tax Exemption Chart: Qualifying Goods and Form 13

Nebraska sales tax exemptions cover groceries, prescription drugs, commercial agricultural inputs and machinery, manufacturing equipment, purchases by government agencies and qualifying nonprofits, and a handful of other specific items. Every retail sale in Nebraska is presumed taxable until the buyer or the transaction fits one of these carved-out categories.1Nebraska Legislature. Nebraska Code 77-2703 – Sales and Use Tax; Rate; Collection The state rate is 5.5%, and local jurisdictions can add up to 2% more, so a properly claimed exemption can save 5.5% to 7.5% on a purchase.2Nebraska Department of Revenue. Nebraska Sales and Use Tax Most exemptions are claimed by giving the seller a completed Form 13 at the point of sale.

Groceries and Food Ingredients

Food and food ingredients bought for home consumption are exempt.3Nebraska Legislature. Nebraska Code 77-2704.24 – Food or Food Ingredients; Exemptions The category is wider than many people expect. Meat, produce, flour, milk, and eggs are exempt, and so are soft drinks, candy, chewing gum, bottled water, and ice.4Nebraska Department of Revenue. Nebraska Administrative Code Title 316 Chapter 1 Regulation 087 – Food or Food Ingredients Nebraska does not carve soda and candy back into the taxable list the way some other states do.

Prepared food is the main exception. If food is sold heated, sold with utensils provided by the seller, or made by the seller from two or more ingredients mixed together and sold as a single item, tax applies.3Nebraska Legislature. Nebraska Code 77-2704.24 – Food or Food Ingredients; Exemptions Vending machine food is taxable regardless of type. A bag of chips off the grocery shelf is exempt. A sandwich the deli counter assembles for you is not.

Prescription Drugs and Medical Equipment

Insulin, prescription drugs, and mobility-enhancing equipment sold under a prescription for a patient’s use are exempt.5Nebraska Legislature. Nebraska Code 77-2704.09 – Insulin; Prescription Drugs; Mobility Enhancing Equipment; Medical Equipment; Exemptions Durable medical equipment, home medical supplies, prosthetic devices, oxygen, and oxygen equipment are also exempt, but with an added requirement: they must be the type eligible for coverage under Nebraska’s Medicaid program.6Nebraska Department of Revenue. Nebraska Regulation 1-050

The prescription itself is what unlocks the exemption for medical items. A walker or wheelchair bought without a prescription from a licensed practitioner does not qualify. Over-the-counter medicines like aspirin and cold remedies are fully taxable in Nebraska, even when they treat a genuine medical need.

Commercial Agriculture

Depreciable agricultural machinery and equipment used in commercial agriculture is exempt, including harvesting equipment, climate-control systems in livestock buildings, and equipment used to process agricultural products on the farm or ranch. Net wrap, baling wire, and twine used in commercial agriculture also qualify.7Nebraska Legislature. Nebraska Code 77-2704.36 – Agricultural Machinery and Equipment; Net Wrap, Baling Wire, and Twine; Exemption

The Nebraska Department of Revenue treats the following as exempt when used in commercial agriculture:8Nebraska Department of Revenue. Commercial Agriculture Tax Exemptions

  • Seeds and annual plants that produce food for human consumption, sold to commercial producers
  • Cattle, sheep, swine, poultry, and other animals whose products ordinarily constitute food for human consumption
  • Feed and water for animals ordinarily used as food
  • Agricultural chemicals, including adjuvants, surfactants, and bonding agents applied to land or crops
  • Veterinary drugs and antibiotics for food-producing or pelt-producing animals
  • Water for irrigation of agricultural land
  • Repair and replacement parts for exempt agricultural machinery

The word “commercial” does real work here. A hobby garden or a pet owner buying feed for animals that are not raised for food does not qualify. Machinery must also be depreciable, meaning it has a useful life beyond a single season and is used in a trade or business.

Manufacturing Machinery and Equipment

Machinery and equipment purchased or leased for use in manufacturing is exempt, as are installation, repair, and maintenance services performed on that equipment.9Nebraska Legislature. Nebraska Code 77-2704.22 – Manufacturing Machinery and Equipment and Related Services; Exemption10Nebraska Department of Revenue. Nebraska Administrative Code Title 316 Chapter 1 Regulation 1-107 – Manufacturing Machinery and Equipment The equipment must be used directly in the manufacturing process. Office furniture, break-room appliances, and general-purpose vehicles owned by a manufacturer do not qualify simply because the manufacturer bought them. Raw materials that become physical components of a finished product, and items purchased for resale, are also exempt, which prevents tax from stacking at every stage of production.

Government Agencies and Qualifying Nonprofits

Government purchases are exempt across the board. The statute covers the State of Nebraska, counties, townships, cities, villages, public school districts, learning communities, natural resources districts, fire protection districts, airport authorities, and other public entities.11Nebraska Legislature. Nebraska Code 77-2704.15 – Purchases by State, Schools, or Governmental Units; Exemption; Purchasing Agents Federal agencies are also exempt, under the Supremacy Clause of the U.S. Constitution.12Nebraska Department of Revenue. Nebraska Administrative Code Title 316 Chapter 1 Regulation 093

Nonprofit status alone does not exempt a purchase. Nebraska limits nonprofit exemptions to specific categories: organizations created exclusively for religious purposes, nonprofits serving the blind, accredited private colleges and universities with a primary campus in Nebraska, and health care facilities such as hospitals, skilled nursing facilities, hospices, and home health agencies.13Nebraska Legislature. Nebraska Code 77-2704.12 – Nonprofit Religious, Service, Educational, or Medical Organization; Exemption; Purchasing Agents A qualifying organization must apply on Form 4 and receive a numbered certificate of exemption from the Department of Revenue before sellers can honor the exemption.14Nebraska Department of Revenue. Nebraska Department of Revenue Regulation 1-090 – Nonprofit Organizations

Other Common Exemptions

Newspapers published at least 52 times a year that carry matters of general interest and reports of current events are exempt, sold by subscription or individually.15Nebraska Department of Revenue. Nebraska Administrative Code Title 316 Chapter 1 Regulation 054 – Newspapers Monthly magazines and other specialty publications that miss the 52-issue threshold are taxable.

Motor vehicles get a partial break through the trade-in allowance. Sales tax is calculated on the difference between the vehicle’s purchase price and the value of any trade-in, not on the full sticker price.16Legal Information Institute. 316 Neb. Admin. Code, ch. 1, 020 – Motor Vehicles A nonresident who already registered and used a vehicle in another state is exempt from Nebraska use tax when licensing the vehicle here. Vehicles received as a gift or inheritance are exempt when the prior owner already paid sales tax.

Which Services Are Taxable

Nebraska taxes only the services the legislature has specifically listed. If a service is not on the list, it is not taxed. The taxable services include:17Nebraska Legislature. Nebraska Code 77-2701.16

  • Gas, water, sewer, and electricity service
  • Intrastate telephone, mobile phone, and telegraph service
  • Cable and satellite television
  • Building cleaning, maintenance, and pest control
  • Security services
  • Motor vehicle washing, waxing, towing, and painting
  • Computer software training
  • Installation of taxable tangible personal property
  • Recreational vehicle park services
  • Repair and maintenance of tangible personal property

Accounting, legal, and most professional consulting services are not taxed. A plumber’s labor to repair tangible personal property is taxable; a financial advisor’s fee is not.

How to Claim an Exemption With Form 13

Most exemption claims run through the Nebraska Resale or Exempt Sale Certificate, known as Form 13. The buyer gives the completed form to the seller at the time of purchase, and the seller keeps it as documentation for why tax was not collected.18Nebraska Department of Revenue. Nebraska Resale or Exempt Sale Certificate

A completed Form 13 needs:

  • Names and addresses of the buyer and the seller
  • Whether the certificate covers a single purchase or is a blanket certificate for future purchases
  • The specific basis for the exemption (resale, agricultural use, manufacturing use, exempt organization, and so on)
  • Signature of an authorized person
  • Date of issuance

Section A of the form covers resale purchases and generally requires the buyer’s Nebraska sales tax permit number. Section B covers exempt-use purchases such as agricultural equipment, manufacturing machinery, and purchases by exempt organizations; some categories in Section B do not require a Nebraska ID number at all.18Nebraska Department of Revenue. Nebraska Resale or Exempt Sale Certificate

A blanket certificate on file with a regular supplier lets the buyer make repeated exempt purchases without a new form each time. If the buyer’s business name, address, or ownership changes, the existing certificate may no longer be valid and should be updated. Nebraska also accepts the Streamlined Sales Tax Exemption Certificate, recognized by all 24 member states of the Streamlined Sales Tax Agreement, which is useful for businesses buying across state lines.

Penalties for Misuse and Recordkeeping

Presenting a Form 13 for a purchase that does not actually qualify carries a penalty of $100 or ten times the tax that should have been collected, whichever is larger, for each improper use.19Nebraska Legislature. Nebraska Code 77-2706 That is on top of the tax, interest, and any other penalties owed. On a $50,000 equipment purchase where the 5.5% tax would have been $2,750, the misuse penalty alone could reach $27,500.

Sellers have their own obligation. Sales tax records, including every Form 13 received, must be kept for at least three years from the date they were created.20Nebraska Legislature. Nebraska Code 77-2711 A seller who cannot produce a valid exemption certificate during an audit can be held responsible for the uncollected tax, plus penalties and interest, even when the underlying sale would have qualified.