State senators, Governor-elect Pillen, and local elected officials probably heard a lot about taxes from Nebraskans on the campaign trail this year. Nebraskan’s tax concerns along with record state coffers mean tax relief will certainly be on next year’s legislative session. The push for relief from rural citizens is not without substance. Nebraskans in rural counties paid the highest taxes per person in 2020 according to estimates by Nebraska Farm Bureau using Department of Revenue tax data and U.S. Census population estimates.
Figure 1 illustrates the average total taxes paid per person in each county in 2020. The numbers encompass the combined total of sales, income, and property taxes paid. McPherson County residents possessed the highest tax obligation, with the average resident paying $9,500 in taxes. Many other Sandhills counties followed suit, with the highest totals in the state found in that region. Elsewhere, several rural counties in southwest Nebraska and the Panhandle also ranked high.
Moving eastward, per capita taxes generally decreased. Eastern Nebraska, specifically the southeastern region, is associated with some of the lowest tax liabilities. Dakota County paid the lowest amount at about $2,900 per person. Taxes tended to be less per resident in Nebraska’s least rural counties. The average Lancaster County resident paid $3,700 in taxes, ranking 87th out of the state’s 93 counties. Other more urban and suburban counties fell lower in the rankings too. Hall County ranks 88th, Sarpy is 80th, Madison is 70th, Buffalo is 68th, and Douglas is 64th. Overall, the average Nebraskan paid $5,314 in total taxes in 2020.
The findings indicate rural Nebraskans paid more taxes for a given bundle of government services relative to their urban cousins. Clearly population density plays a role as there are fewer persons to share the burden of government services in rural areas. As part of their tax relief discussions next year, elected officials must decide whether the disparities in taxes between rural and urban counties are too great. Rural Nebraskans would argue they are.
Figure 1. 2020 Total Taxes Paid Per Capita, by County
Source: NEFB calculation based on Department of Revenue sales/income/property tax estimates and 2020 U.S. Census data