Disclaimer: Nebraska inheritance tax filings are considered the practice of law. Accountants are prohibited from preparing or submitting these filings. The information in this article is for general educational purposes only and should not be interpreted as legal advice. Individuals should consult with a qualified attorney for guidance on inheritance tax filings or any legal requirements related to administering an estate. 
 
When a loved one passes away, navigating estate matters can feel overwhelming, especially when taxes come into play. In Nebraska, one of the most commonly misunderstood estate-related taxes is the inheritance tax. While many states have phased out this type of tax, Nebraska is one of just a few that still impose it. Understanding how it works, who pays it, and how to plan can help ease the financial and emotional burden during an already difficult time. 

What is Nebraska's inheritance tax? 

Nebraska’s inheritance tax is a county-level tax assessed on the beneficiaries of an estate, not the estate itself. That means the tax depends on who inherits the property and their relationship to the deceased, rather than the total size of the estate. This is a separate tax from the Federal estate tax. 

Each of Nebraska’s 93 counties collects an inheritance tax, which is then used to support local government and community services. The rules are established under state law but administered locally, meaning filing requirements and forms can vary slightly by county. 

While Nebraska’s inheritance tax is technically paid by the beneficiary, the estate typically remits the payment to the county on their behalf.  

Who pays inheritance tax in Nebraska? 

The amount of tax due depends on the relationship between the deceased and the beneficiary. Under Nebraska law (as of 2025), beneficiaries fall into one of three main categories: 

Note: Spouses are fully exempt from the Nebraska inheritance tax. 

Example: If a parent leaves $250,000 to a child, the first $100,000 is exempt. The remaining $150,000 is taxed at 1%, resulting in a $1,500 tax liability. 

How is the tax paid?

Inheritance tax is paid by the beneficiary, but in many cases, the estate’s personal representative (or executor) handles the calculation and payment before assets are distributed. Each county treasurer or clerk’s office reviews the inheritance tax return to verify the correct amount has been paid. Taxes are due within one year of the date of death, though filing earlier often speeds up probate and asset distribution. 

Planning to Reduce or Avoid Inheritance Tax 

While inheritance tax can’t always be avoided, there are estate planning strategies to help reduce its impact on beneficiaries. Common planning steps include: 

• Gifting during your lifetime. Nebraska’s inheritance tax only applies to property transferred at death, so strategic gifting can reduce taxable estate value. 
• Using trusts. Certain trust structures can help control how and when assets are distributed while minimizing tax exposure. 
• Titling property jointly. Assets owned jointly with rights of survivorship often transfer outside of probate, though this must be approached carefully for legal and tax reasons. 
• Updating your estate plan regularly. Changes in tax laws, property ownership, or family structure can affect your exposure to inheritance tax. 

A qualified estate planning advisor can help evaluate these strategies and determine which approach best aligns with your goals. 

Recent Legislative Updates 

Nebraska’s inheritance tax thresholds were updated in 2023, increasing exemption amounts and slightly reducing rates for certain relatives. These changes were intended to modernize the system and reduce the burden on family beneficiaries. 

However, lawmakers continue to discuss potential reforms. Changes to the exemption amounts and lowering the rates for Class II and Class III beneficiaries have all been recently discussed. Staying informed and reviewing your estate plan periodically helps ensure your strategy remains effective under current law. 

Manage Your Inheritance with Lutz 

While Nebraska’s inheritance tax may seem complex, understanding the basics can help families avoid surprises and plan. Whether you’re administering an estate or planning your own, Lutz’s tax services help ensure your loved ones are protected and prepared, although an attorney must perform the filing. Contact us with questions.