Cigarette Taxes and Cigarette Smuggling by State, 2022
Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
16 min readNebraska‘s tax system ranks 24th overall on the 2025 State Tax Competitiveness Index. Nebraska has taken strides to improve its income tax competitiveness in recent years by reducing its individual and corporate income tax rates. Currently, the state’s graduated individual income tax rates range from 2.46 percent to 5.84 percent, and its corporate income tax rates range from 5.58 to 5.84 percent. Despite these improvements, Nebraska maintains an uncompetitive “convenience of the employer rule,” which can lead to double taxation (with no offsetting credit) for remote employees working for businesses located in Nebraska—ultimately a disincentive for businesses to locate in the state if they want to be able to hire across the country. Nebraska also requires individual income tax filing and withholding for nonresidents working even a single day in the state.
Notably, Nebraska’s property taxes are on the high side regionally and nationally, and Nebraska is one of the few states that continues to impose an antiquated capital stock tax, which is assessed against the net worth of Nebraska corporations and imposed regardless of whether a firm makes a profit. The Nebraska Occupation Tax, as it is known in the state, is collected every other year, which complicates the filing process, since firms must track their net worths across two tax years. Nebraska also retains an inheritance tax, albeit on a declining share of beneficiaries, and is the only state to have adopted but then abandoned a tangible personal property tax de minimis exemption.
Category | Rank | Rank Change | Score |
---|---|---|---|
Overall | 24 | -4 | 5.16 |
Corporate Taxes | 20 | -7 | 5.36 |
Individual Income Taxes | 26 | -3 | 5.28 |
Sales Taxes | 13 | 1 | 5.24 |
Property Taxes | 45 | 0 | 3.93 |
Unemployment Insurance Taxes | 3 | 1 | 6.01 |
Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise.
16 min readWith the significant potential for state revenues, and the prior political success of arguments that legalization can shift consumers to safer legal markets, it seems likely that states will continue to see legislation and ballot initiatives to legalize marijuana at the state level—even states that failed to do so this election.
5 min readIn addition to the federal estate tax, with a top rate of 40 percent, 12 states and DC impose additional estate taxes, while six states levy inheritance taxes.
7 min read