Nebrasksa has an Inheritance Tax

Nebraska Inheritance Law

Nebrasksa has an Inheritance Tax

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Inheritance Law > Does Your State Collect an Inheritance Tax? > Nebraska

Nebrasksa has an Inheritance Tax

In Nebraska, there's an inheritance tax.  This tax falls on estates worth more than $40,000, 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.

Next, close relatives (such as parents, grandparents, children, grandchildren and other lineal descendants) are taxed on inheritances over $40,000, 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 $15,000, and the rate is 13%.

Any other heirs are taxed on inheritances over $10,000, and the rate is 18%.

The information about the inheritance tax return form, instructions, and tax rates can be found at Nebraska Department of Revenue's website.

This state-specific inheritance tax is in addtion 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 $5 million, which is indexed to inflation and is currently $5,450,000, 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 $5,450,000), 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 The only exception to this are inherited retirement accounts, which are subject to income tax as the assets are withdrawn.

 


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