In Nebraska, there's an inheritance tax. This tax falls on estates worth more than $100,000 for close relatives, but it only falls on certain heirs, not all.
First, the surviving spouse is entirely exempt, which means the surviving spouse will not pay any state inheritance tax, and as of 2023, anyone under 22 pays no inheritance tax thanks to LB310, which significantly changed Nebraska inheritance law, as of January 1, 2023
Next, close relatives (such as parents, grandparents, children, grandchildren and other lineal descendants) are taxed on inheritances over $100,000, and the rate is 1% on the clear market value of the assets over this exempt amount.
More distant relatives (such as aunts, uncles, nieces, and nephews) are taxed on assets over $40,000, and the rate is 11%.
Any other heirs are taxed on inheritances over $25,000, and the rate is 15%.
Tax Rate and Exemptions
There are three levels, or rates, of inheritance tax and separate exemption amounts, which are described in the law as transfers to immediate relatives, to remote relatives and to others.
Through 2022
| Class | Exemption Amount | Rate |
| I Immediate relatives | $40,000 | 1% |
| II Remote relatives | $15,000 | 13% |
| III Others | $10,000 | 18% |
Commencing 2023
| Class | Exemption Amount | Rate |
| I Immediate | $100,000 | 1% |
| II Remote | $40,000 | 11% |
| III Others | $25,000 | 15% |
Exemptions
The exemption is the amount that the heir is entitled to receive that is free of tax; in other words, the tax kicks in after the exemption amount. In addition to the exemption amounts stated above, there are two additional exemptions:
- 1) Property passing to a spouse is not taxed (an unlimited exemption, you might say), and
- 2) commencing in 2023, property passing to an individual in Class I or II who is under 22 years of age is not taxed.
The exemptions are for recipients, meaning that each person who receives property from the deceased is entitled to the applicable exemption. For example, if a deceased person were to leave $150,000 to each of three children, the first $100,000 that each receives would be exempt, and tax would be payable on the remaining $50,000, at 1%, or $500 each.
Property transferring to charitable organizations is also exempt from inheritance tax.
Information about the inheritance tax return form, instructions, and tax rates can be found at the Nebraska Department of Revenue's website.
This state-specific inheritance tax is in addition to the federal estate tax, and that tax also falls on the estate of the person who died, not on the people who inherit that property. There is an exemption of $13,610,000, and only people who die with an estate larger than that exemption will have to pay estate tax, which means that it is estimated that only the richest .14% of Americans will be subject to the estate tax at all, or only 2 out of every 1,000 people who die.
If someone dies in Nebraska with less than the exemption amount (currently $13,610,000), their estate doesn't owe any federal estate tax. The heirs and beneficiaries inherit the property free of federal tax, and don't pay income tax on it, either, because inherited property is not ordinary income. The only exception to this are inherited retirement accounts, which are subject to income tax as the assets are withdrawn.