DISCLAIMER: THE INFORMATION CONTAINED HEREIN IS SOLEY FOR EDUCATIONAL PURPOSES. IT IS NOT LEGAL ADVICE OR LEGAL AUTHORITY AND IS ONLY THE AUTHOR’S INTERPRETATION OF ESTATE PLANNING, TRUST ADMINISTRATION & PROBATE TAX LAWS.
As an estate planning attorney licensed in Nebraska, I regularly help families and individuals navigate complex questions about what happens to their property when they pass away — especially when taxes are involved. With recent changes to Nebraska’s tax laws and ongoing discussions in the Legislature, it’s more important than ever to understand how estate taxes and inheritance taxes work in our state.
Does Nebraska Have a State Estate Tax?
Short answer: No.
Nebraska does not impose a state-level estate tax on a decedent’s estate itself. This means the estate as an entity is not taxed before assets pass to beneficiaries under Nebraska law. The state abolished its estate tax for decedents dying on or after January 1, 2007.
However, that doesn’t mean taxes are irrelevant — because Nebraska has a state inheritance tax that may apply to the individuals receiving property.
What Is Nebraska’s Inheritance Tax?
Nebraska is one of the few states that imposes an inheritance tax — a tax paid by beneficiaries based on what they inherit and their relationship to the decedent. This tax is separate from federal estate taxes and depends on both:
- The value of the inheritance received, and
- Your relationship to the person who died.
Unlike federal estate tax (which applies only to very large estates), Nebraska’s inheritance tax can apply to much smaller inheritances.
Current Inheritance Tax Rates & Exemption Amounts
(Post-2023 Changes)
For deaths occurring on or after January 1, 2023, Nebraska updated its inheritance tax structure under Legislative Bill 310 to:
Immediate Family / Close Relatives
Includes children, parents, grandparents, siblings, grandchildren, and spouses of those relatives.
- Exemption: Up to $100,000 per beneficiary
- Tax rate on excess: 1% of the value above $100,000
- (Spouses remain completely exempt — they don’t pay any inheritance tax.)
Remote Relatives
Includes aunts, uncles, nieces, nephews, and spouses of those relatives.
- Exemption: Up to $40,000 per beneficiary
- Tax rate on excess: 11%
(This was reduced from 13% prior to 2023.)
Others / Non-Relatives
Individuals with no close or remote family relationship.
- Exemption: Up to $25,000 per beneficiary
- Tax rate on excess: 15%
(This was reduced from 18% prior to 2023.)
Who Pays the Tax?
- Beneficiaries (heirs) generally are responsible for paying the inheritance tax on what they receive.
- The tax is computed on the fair market value of the property that passes to a beneficiary whether through the estate, joint tenancy, pay on death or transfer on death.
Interestingly, inheritance tax is often handled through the county court — and the county where the decedent lived (or where property is located) administers the tax.
What’s Not Taxed?
- Transfers to a surviving spouse are entirely tax-free.
- Certain expenses (like funeral costs, administration fees, and final illness expenses) may reduce the taxable amount.
- Some assets may be exempt or deductible under specific rules.
(Always consult a professional — exemptions and deductions can be nuanced.) - Life insurance that is payable to a beneficiary other then the estate.
Federal Estate Tax Still Matters
While Nebraska doesn’t tax estates directly, the federal estate tax can still apply if the total value of an estate is large enough (the federal exemption for 2026 is $15 million per individual). Estates that exceed that threshold may owe federal tax before distributions.
How This Affects Your Estate Plan
Understanding Nebraska’s inheritance tax is crucial for effective estate planning. Without careful planning:
- Your loved ones might inherit unexpected tax bills,
- Assets could be distributed in less tax-efficient ways,
- And family members with different relationships to the decedent may owe very different taxes on the same property.
There are estate planning tools — such as trusts, lifetime gifts, and structured bequests — that the attorneys at Adams & Sullivan can use to help minimize tax liabilities and ensure your wishes are carried out efficiently.
Bottom Line
You don’t need to be wealthy to benefit from estate planning in Nebraska, but you do need to understand how inheritance tax works. Because Nebraska taxes the recipient rather than the estate itself, your heirs could owe tax based on the type of relationship they have with you and the value of what they receive.
If you’re considering updating your will, planning for multi-state property, or worried about your heirs facing unexpected tax exposure, it’s wise to consult an experienced Nebraska estate planning attorney who understands both state and federal tax implications.
About the Author
Patrick J. Sullivan
Adams & Sullivan, PC, LLO
Adams & Sullivan, P.C., L.L.O. was established in 1951 and for 30 years Mr. Sullivan has been helping property owners, heirs, and trustees navigate the intricately connected real estate, probate, and trust laws.