Nebraska LLC Tax Elections — S-Corp & C-Corp Options
Your Nebraska LLC's default pass-through taxation isn't your only option. Tax elections can significantly change your federal tax burden (particularly self-employment tax). The right choice depends on income level and business structure. For the complete tax picture, see our tax guide. For formation, see our LLC guide.
Available Elections
| Election | Federal Form | Key Benefit | Best For |
|---|---|---|---|
| Default (disregarded/partnership) | Automatic | Simplicity | Most small LLCs |
| S-Corporation | Form 2553 | SE tax savings on distributions | Income >$50K-$75K |
| C-Corporation | Form 8832 | 21% rate on retained earnings | Rarely optimal for small LLCs |
S-Corp Election — Most Common
How it works:
- Pay yourself a reasonable salary (subject to employment taxes)
- Take remaining profits as distributions (NOT subject to self-employment tax)
- Save ~15.3% SE tax on the distribution portion
Example ($120,000 Nebraska LLC net income):
| Default LLC | S-Corp Election | |
|---|---|---|
| SE tax base | $120,000 | $70,000 (salary only) |
| SE tax (15.3%) | ~$16,960 | ~$10,710 |
| Annual savings | — | ~$6,250 |
| Minus payroll costs | $0 | -$1,500 |
| Net benefit | — | ~$4,750 |
Nebraska-specific notes:
- S-corp election does NOT change Nebraska income tax rate (2.46%-5.84% applies regardless)
- Must run Nebraska payroll: withhold Nebraska income tax + federal payroll taxes
- Nebraska unemployment insurance applies to employee wages
- File Form 2553 within 75 days of formation or by March 15
C-Corp Election — Rare for Small LLCs
Ready to get started?
Get Started- LLC pays federal corporate tax at 21% + Nebraska corporate income tax (5.58%/7.25%)
- Distributions taxed again to members (double taxation)
- Only makes sense if retaining large profits for reinvestment
- Minimum Nebraska corporate tax implications — consult a CPA
FAQ
When should I elect S-corp for my Nebraska LLC?
When net income consistently exceeds $50,000-$75,000 and the SE tax savings ($3,000-$10,000+/year) justify the administrative costs of payroll ($1,000-$2,000/year). Below $50K, stick with default treatment.
Does Nebraska conform to the S-corp election automatically?
Yes. Nebraska recognizes the federal S-corp election — no separate state election is needed. File Form 2553 with the IRS and Nebraska automatically treats your LLC accordingly.
Can I revoke the S-corp election?
Yes, after the first year, with consent of shareholders owning 50%+ of stock. Must wait 5 years before re-electing.