Nebraska inheritance tax remains one of the few state-level inheritance taxes still enforced in the United States, and recent legislative activity continues to shape how families, heirs, and estate planners prepare in 2026.
Unlike federal estate tax, this tax applies to the person receiving property rather than the estate itself. Nebraska counties administer and collect the tax through probate courts. Because proposals to repeal or modify the tax have been debated in the state legislature in recent years, the topic continues to receive attention from taxpayers and policymakers.
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What the Nebraska Inheritance Tax Is
Nebraska inheritance tax is a county-level tax imposed on beneficiaries who inherit assets from a deceased person who lived in Nebraska. The tax depends on the relationship between the heir and the decedent.
Close relatives pay lower rates and receive larger exemptions. More distant heirs face higher rates and smaller exemptions.
Key characteristics:
- It is not a federal tax.
- Counties collect the tax.
- The beneficiary pays it, not the estate.
- Rates vary by relationship category.
Nebraska remains one of only a small number of states that still enforce an inheritance tax, which keeps the issue relevant in national tax discussions.
Current Nebraska Inheritance Tax Rates (2026)
As of 2026, Nebraska law still uses a tiered system based on family relationship.
Category 1 — Immediate relatives (lowest rate)
Includes spouses, parents, grandparents, children, siblings, and other close relatives.
- Exemption: $100,000
- Tax rate: 1% on amounts above the exemption
Category 2 — Remote relatives
Includes aunts, uncles, nieces, nephews, and similar relationships.
- Exemption: $40,000
- Tax rate: 13% on amounts above the exemption
Category 3 — Non-relatives (highest rate)
Includes friends or unrelated beneficiaries.
- Exemption: $25,000
- Tax rate: 18% on amounts above the exemption
Spouses remain fully exempt under Nebraska law.
How the Tax Is Calculated
The calculation starts after probate identifies each beneficiary’s share.
Steps typically include:
- Determine the beneficiary’s relationship category.
- Subtract the exemption amount.
- Apply the correct tax rate to the remaining value.
- File inheritance tax forms with the county court.
Payment deadlines are tied to probate timelines. Counties may assess interest if payment is late.
Recent Legislative Activity and Policy Debate
The Nebraska inheritance tax continues to be a recurring legislative topic. Lawmakers have introduced multiple bills in recent sessions that aimed to reduce rates, increase exemptions, or eliminate the tax.
Key verified developments through 2026:
- Proposals to phase out the tax have been introduced but not fully enacted.
- Counties rely heavily on inheritance tax revenue for local services.
- Debate often centers on replacing lost county funding if repeal occurs.
- Some measures have focused on raising exemptions rather than eliminating the tax entirely.
Because repeal would affect county budgets, legislative changes have moved slowly.
Why the Tax Still Exists
Nebraska’s inheritance tax generates significant local revenue.
Counties use the funds for:
- Infrastructure projects
- Public safety
- Property tax relief programs
- Local government operations
Supporters argue the tax helps reduce reliance on property taxes. Critics say it creates financial pressure on families after a death.
This tension explains why reform discussions continue but full repeal has not yet occurred.
Who Must Pay Nebraska Inheritance Tax
Not every inheritance triggers a payment.
Common scenarios that may require tax:
- Real estate inherited by distant relatives
- Investment accounts left to non-family members
- Large asset transfers above exemption thresholds
- Gifts structured as inheritance through estate planning
Small inheritances often fall below exemption limits, especially for close relatives.
Assets Subject to the Tax
The Nebraska inheritance tax generally applies to:
- Real estate located in Nebraska
- Bank accounts
- Stocks and investment portfolios
- Vehicles
- Personal property with measurable value
Life insurance payable directly to a named beneficiary often receives different treatment depending on ownership structure.
Trust arrangements may also affect tax exposure.
Planning Strategies Used by Families
Estate planning professionals frequently help families reduce inheritance tax exposure using legal methods.
Common approaches include:
- Lifetime gifting strategies
- Trust structures
- Asset titling adjustments
- Beneficiary designation planning
- Timing transfers before death
Planning is especially important for beneficiaries in higher tax categories.
How Nebraska Compares With Other States
Only a few states still impose inheritance taxes. Nebraska is one of them.
Compared nationally:
- Many states have eliminated inheritance taxes.
- Some states impose estate tax instead.
- Nebraska’s county-based system is unusual.
- Rates for non-relatives are among the higher tiers nationwide.
This makes the Nebraska inheritance tax a frequent topic in national tax reform discussions.
What Could Change Next
Policy discussions remain active in 2026.
Possible future changes debated by lawmakers include:
- Increasing exemption amounts
- Reducing rates for distant relatives
- Gradual phase-out over several years
- Replacing county revenue with state funding
- Full repeal proposals
However, no confirmed statewide repeal has taken effect as of today.
That means the Nebraska inheritance tax remains fully in force.
Key Takeaways for Beneficiaries
Important points to understand:
- The tax still applies in 2026.
- Relationship to the deceased determines the rate.
- Counties handle administration and collection.
- Legislative reform remains under discussion but incomplete.
- Estate planning can reduce potential liability.
Anyone expecting to inherit Nebraska property should review the rules early.
Conclusion
The Nebraska inheritance tax continues to shape estate planning decisions across the state in 2026. While lawmakers regularly debate reform, the current system of exemptions and relationship-based rates remains active, and counties still depend on the revenue it generates.
What do you think about inheritance tax reform in Nebraska — should it be reduced, replaced, or eliminated? Share your thoughts below and stay updated on future changes.
