Nebraska Inheritance Tax

If you inherit property from a Nebraska resident or a person who owned property in Nebraska, you could be subject to the Nebraska state inheritance tax. This tax is levied on the value of property that passes to the beneficiaries and is different from the federal estate tax, which is charged on the net value of the decedent's estate. There are exemptions based on your relationship to the decedent. The closer your relationship, the higher will be the amount exempt from tax and the lower will be your tax rate.

Exemptions

According to Professor J. David Aiken writing for the University of Nebraska in "Cornhusker Economics", the Nebraska inheritance tax exemptions and rates were changed effective January 1, 2008. According to the legislation, the surviving spouse is completely exempt from the inheritance tax.

Close relatives including the decedent's parents, grandparents, brothers and sisters, children and grandchildren, both biological and adopted, and the spouses of any of these relatives are entitled to a $40,000 exemption and are subject to a 1% tax on the value of their inheritance in excess of that amount.

Other beneficiaries including the decedent's aunts, uncles, nieces, or nephews, related to the decedent by blood or legal adoption, and any lineal descendants of these persons are entitled to a $15,000 exemption, with a tax rate of 13% on the excess.

Beneficiaries who are not related to the decedent have an exemption of $10,000 and are subject to tax at a rate of 18% on the value of property transfers in excess of that amount. But transfers to organizations operating exclusively for religious, charitable, public, scientific, or educational purposes are exempt from the inheritance tax. Bequests to a political subdivision or government agency of the United States or Nebraska are also completely tax free.

How the Nebraska inheritance tax works