If you’ve recently lost a loved one and inherited property, you may be wondering whether Nebraska will tax your inheritance. As an estate planning attorney, I get this question all the time—and the answer can significantly affect your financial planning. Let’s break down Nebraska’s inheritance tax and what you need to know.
What Is Inheritance Tax?
Inheritance tax is a state-imposed tax on the transfer of assets from a deceased person, or “decedent,” to their heirs, or recipients of the inheritance. Unlike estate tax, which is paid out of the decedent’s estate, inheritance tax is paid by the heirs. Whether or not you pay depends on your relationship to the deceased and the value of what you inherit.
Does Nebraska Have an Inheritance Tax?
Yes, Nebraska is one of six states that currently imposes an inheritance tax. The others include Iowa, Kentucky, Maryland, New Jersey, and Pennsylvania.
Nebraska does not currently have a state-level estate tax. However, federal estate tax may apply in estates exceeding the federal threshold (which changes annually).
How Is Inheritance Tax Determined in Nebraska?
Nebraska inheritance tax is calculated based on the heir’s relationship to the decedent and the value of the property inherited. The closer the familial relationship, the higher the exemption and lower the tax rate.
Nebraska Inheritance Tax Rates
Here are the basic Nebraska inheritance tax rates and exemption amounts based on the heir’s relationship:
| Relationship to Deceased | Exemptions & Tax Rates |
| Spouse | Always exempt |
| Immediate relatives (e.g., children, parents) | Exempt up to $100,000 (taxed at 1% over that) |
| Extended relatives (e.g., siblings, nieces, nephews) | Exempt up to $40,000 (taxed at 11% over that) |
| Unrelated individuals (e.g., friends, neighbors, etc.) | Exempt up to $25,000 (taxed at 15% over that) |
What Assets Are Subject to Inheritance Tax in Nebraska?
Nebraska inheritance tax applies to all personal property and real estate located in Nebraska owned by the Decedent at the time of death. Assets that are subject to inheritance tax in Nebraska include:
- Real estate
- Cash and bank accounts
- Investment accounts
- Business interests
- Vehicles
- Personal property
Common deductions and exemptions include:
- Funeral and administrative expenses
- Debts of the decedent
- Exempt property based on relationship
When Are Inheritance Taxes Due in Nebraska?
An inheritance tax in Nebraska must be filed and paid within one year from the date of the Decedent’s death to avoid penalties and interest. Additionally, a lien is placed on any real estate owned by the Decedent until the tax is paid. You can use a Nebraska inheritance tax worksheet to assist in calculating what may be owed.
This article should not be construed as legal advice. Situations are different and it’s impossible to provide legal advice for every situation without knowing the individual facts.
If you’ve found yourself thrust into the unfamiliar territory of estate planning, the expert attorneys at Hightower Reff Law will be there to help you through the process with our comprehensive estate planning and probate services. Contact us today for help and answers to your questions.
