Credit card processing and merchant services in Lincoln, NE
Lincoln's sales tax is 7.25%, and restaurants and bars add a 2% city occupation tax that also reaches mandatory gratuities. The order you apply the two taxes in matters.
Lincoln's sales tax is 7.25%: Nebraska's 5.5% plus a 1.75% city rate, according to the City of Lincoln. That's a quarter point more than Omaha's 7%, so a business with stores in both cities can't share one tax setting.
Restaurants and bars carry a second city tax. Lincoln's restaurant and bar occupation tax is 2% of gross receipts from food and drink, and the City Treasurer's FAQ says you calculate it on the meal charge first, then figure state and local sales tax on that subtotal. On a $60 tab, the occupation tax is $1.20, the sales tax on $61.20 is $4.44, and the guest pays $65.64.
Service charges are where restaurants slip. The City counts a gratuity as part of the taxable receipts when you charge it as a mandatory item on the invoice or receipt, so an automatic service charge for a large party belongs in the occupation tax base. If your POS adds that charge after the tax lines, your monthly figure will come up short. The tax is paid to the City, due on or before the 25th of each month for the month before.
Omaha runs a similar tax at 2.5%, and our Omaha page covers it. Nebraska has no surcharge statute that we found, so the card network caps govern any card fee here, as the Nebraska page explains.
Lincoln had 301,522 residents in the Census Bureau's July 1, 2025 estimate. Clearo prices restaurant and retail accounts on interchange-plus, sets up POS terminals for tables and counters, and offers a free statement review so you can see what each card costs before your next busy weekend.
Rules that matter in Lincoln
Restaurant and bar occupation tax
The City of Lincoln levies an occupation tax of 2% of gross receipts on each business operating a drinking place or restaurant in the city. It applies to food and beverage sales that are subject to sales tax, and to gratuities the business charges as a mandatory item on the invoice or receipt.
Calculate the occupation tax on the meal charge first, then figure state and local sales tax on that subtotal; the Nebraska Department of Revenue also says an occupation tax can't be combined with the sales tax into one flat rate. Each month's tax is due to the City on or before the 25th of the following month.
Sources: City of Lincoln, City Treasurer, Restaurant and bar occupation tax FAQ (revised September 30, 2019, PDF); Nebraska Department of Revenue, Occupation taxes
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Common questions
What is the sales tax rate in Lincoln, Nebraska?
7.25%: Nebraska's 5.5% state rate plus Lincoln's 1.75% city rate. Restaurants and bars also owe the City's 2% occupation tax on food and drink, which is calculated before the sales tax.
Is an automatic gratuity subject to Lincoln's restaurant occupation tax?
Yes, when you charge it as a mandatory item on the invoice or receipt, according to the City of Lincoln's FAQ on the tax. Include those service charges in the gross receipts you report, and have your POS apply the 2% before it calculates sales tax.
When is Lincoln's restaurant and bar occupation tax due?
On or before the 25th of each month, for the previous month's receipts, according to the City's FAQ. The tax is 2% of gross receipts from food and beverage sales at restaurants and drinking places in Lincoln, and it's paid to the City of Lincoln rather than the state.
How does Lincoln's restaurant tax compare with Omaha's?
Lincoln's occupation tax is 2% and Omaha's is 2.5%, and in both cities it goes into the price before sales tax is figured. The sales tax rates differ too: 7.25% in Lincoln and 7% in Omaha. A group with restaurants in both cities needs separate settings. Our Omaha page covers that city.
Disclaimer: general information, not professional advice
This page is general educational information, not legal, tax, accounting or financial advice. Rules and rates vary by place and change, so confirm them with the official source and a qualified professional before you act. Full terms are in our Terms of Service.
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