Nebraska Use of Federal Form W-4

The Nebraska Department of Revenue is developing an employee Nebraska withholding allowance certificate form to determine the number of allowances for Nebraska income tax withholding purposes beginning with the year 2020. The new form will be similar to the federal Form W-4 that was in use immediately prior to the Tax Cuts and Jobs Act of 2017 (TCJA).

Nebraska's federal Form W-4

On August 9, 2019, the American Payroll Association asked seven states whether or not they would be creating state withholding forms rather than using the federal Form W-4 in 2020. These seven states include Colorado, Delaware, Nebraska, New Mexico, North Dakota, South Carolina, and Utah.

Nebraska stated that they recognize the significant differences between the federal and Nebraska laws regarding the standard deduction and the allowances for personal exemption credits. The Nebraska Department of Revenue is developing an employee Nebraska withholding allowance certificate form to determine the number of allowances for Nebraska income tax withholding purposes beginning with the year 2020. The new form will be similar to the federal Form W-4 that was in use immediately prior to the Tax Cuts and Jobs Act of 2017 (TCJA).

Nebraska is not required to change their withholding methods due to a law passed in 2018. Legislative Bill 1090, approved by Governor Pete Rickets on April 17, 2018, allows Nebraska to continue using state allowances rather than requiring them to use federal allowances found on the current federal Form W-4.

Nebraska’s DOR anticipates that minimal accommodations will be needed for the new Nebraska withholding allowance certificate form. That is because the past versions of the federal Form W-4 must still be supported.

The current 2017 Nebraska Circular EN will continue to be used for 2020. DOR will continue to use the same formatting as in previous years with the rates and brackets for single and married persons when updating the Nebraska Circular EN.  The tables will NOT be extended for Head of Household status or withholding at a higher rate.