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What You Need to Know About Nebraska’s Inheritance Tax – Updated!

Nebraska is still one of very few states that has an inheritance tax. However, the Nebraska Legislature has made some recent changes to the laws concerning inheritance tax.

For persons dying on or after January 1, 2023, the exemption amount has increased, and the tax rate has decreased for “remote relatives” (aunts, uncles, nieces, and nephews) and for “all others” (friends, neighbors, etc.).

According to Nebraska law, almost all property that will pass by will or by intestate laws (when there is no will), from any person who at the time of their death was a resident, or had property within the state of Nebraska, shall be subject to an inheritance tax. In short, when a loved one dies and you inherit their property, you may be subject to an inheritance tax on that property.  The burden of paying Nebraska’s inheritance tax ultimately falls upon those who inherit the property, not the estate.

Beneficiaries inheriting property pay an inheritance tax over the value that exceeds their exemption amount, which ranges between $25,000 and $100,000. That exemption amount, and the underlying inheritance tax rate, varies based on the inheritance category the beneficiary falls into: (1) Close Relatives – $100,000 exemption (previously $40,000); (2) Remote Relatives – $40,000 exemption (previously $15,000); or (3) All Other Transfers – $25,000 exemption (previously $10,000). The table below breaks down examples of beneficiaries from these three categories:

Relationship to Decedent

Tax Rate

Surviving Spouse Always Exempt
Father/Mother 1% in excess of $100,000
Grandfather/Grandmother 1% in excess of $100,000
Brother/Sister 1% in excess of $100,000
Son/Daughter 1% in excess of $100,000
Legally adopted child/children 1% in excess of $100,000
Person standing as a parent 1% in excess of $100,000
Uncle/Aunt 11% in excess of $40,000 (prev. 13%)
Niece/Nephew 11% in excess of $40,000 (prev. 13%)
Other lineal descendants of the same 11% in excess of $40,000 (prev. 13%)
All others (i.e. friends, neighbors, etc.) 15% in excess of $25,000 (prev. 18%)
Charitable Organizations Usually exempt

Here’s an example: Patricia dies in Nebraska where she was born and raised. Her estate is worth $500,000. Patricia’s husband inherits $300,000. Patricia’s son inherits $125,000. Patricia’s nephew inherits $45,000. Patricia’s long-time friend inherits $30,000. This is what the inheritance tax break down should look like:

  1. Patricia’s husband, as a surviving spouse, would owe nothing because he is exempt from the inheritance tax.
  2. Patricia’s son, as a close relative, would owe 1% of $25,000, as the first $100,000 is not taxable. He would owe $250.
  3. Patricia’s nephew, as a remote relative, would 11% of $5,000, as the first $40,000 is not taxable. He would owe $550.
  4. Patricia’s long-time friend, as the other transferee, would owe 15% of $5,000, as the first $25,000 is not taxable. She would owe $750.

Beneficiaries who owe inheritance tax must pay the tax within twelve months after the death of the decedent. The tax is usually paid to the county where the decedent lived.

When a loved one dies, it can be extremely difficult and overwhelming. For assistance with Nebraska’s inheritance tax and other estate planning or probate concerns, contact Berkshire & Burmeister’s experienced estate planning and probate attorneys.

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