Nebraska Inheritance Tax: Rates and Exemptions

In Nebraska, the death tax falls on each person who inherits, not on the estate as a whole, and a close relative pays just 1 percent.1

A surviving spouse pays nothing, and every taxable heir gets a dollar amount they can inherit before any tax applies. This guide covers who owes the Nebraska inheritance tax, who is exempt, and how the rates and exemptions work for everyone in between.

In This Guide

• Nebraska Inheritance Tax at a Glance
• Inheritance Tax vs. Estate Tax
• How the Nebraska Inheritance Tax Works
• The Beneficiary Classes
• What About Medicaid Estate Recovery?
• Next Steps
• Frequently Asked Questions

Nebraska Inheritance Tax at a Glance

Here is the short version. Nebraska's death tax is not a tax on your estate as a whole. It taxes each person who inherits from you, and the rate depends on their relationship to you.1 Administration runs through the counties: the Nebraska Department of Revenue publishes annual county inheritance tax reports.1

Two things make Nebraska's version distinctive. First, every taxable heir gets a real exemption amount before any tax applies, so small inheritances often owe nothing. Second, the rates are low for close family: immediate relatives and siblings pay just 1 percent on whatever exceeds their exemption.1

The current rates and exemptions apply to deaths on or after January 1, 2023.1 The figures in this guide reflect that structure.

Inheritance Tax vs. Estate Tax

These two get confused constantly, and the difference decides who pays.

An estate tax is paid by the estate before anyone inherits, triggered by the size of the estate. An inheritance tax is paid by the heir, triggered by the heir's relationship to the person who died.1 Two heirs splitting the same estate can owe very different tax, because one was a child and the other was a distant cousin.

Nebraska's tax is the second kind: it is imposed on each person who receives property, at a rate set by that person's relationship to the deceased, not on the estate as a whole.1 The federal estate tax, for the rare estate large enough to owe it, is a separate matter.

How the Nebraska Inheritance Tax Works

The tax sorts every beneficiary into a class. Each class has its own exemption amount and its own rate, and the tax applies only to the value that exceeds the exemption.1

A surviving spouse is fully exempt however the property passes, and so is any beneficiary under age 22. The homestead allowance, exempt property and the family maintenance allowance are not taxed either.1 For everyone taxable, the structure is: immediate relatives pay 1 percent on amounts above $100,000; uncles, aunts, nieces, nephews, their descendants and their spouses pay 11 percent above $40,000; and all other heirs pay 15 percent above $25,000.1

The Nebraska Department of Revenue publishes the annual county inheritance tax reports and points to Neb. Rev. Stat. § 77-2015 as the legal information for the tax.1 Ask the estate's attorney or the probate court exactly where the return is filed and paid. The closer the relationship, the larger the exemption and the lower the rate.

The Beneficiary Classes

A few things worth pulling out of that table.

A spouse and anyone under 22 pays nothing. A surviving spouse is fully exempt, and so is any beneficiary younger than 22, regardless of relationship.1

Immediate relatives pay just 1 percent. Parents, grandparents, children, siblings, any lineal descendant, and the spouses of any of them owe only 1 percent, and only on the amount above a $100,000 exemption. So does someone the deceased stood in the acknowledged relation of a parent to for at least ten years.1 An inheritance of $100,000 or less to this group is tax-free.

Uncles, aunts, nieces and nephews pay 11 percent over $40,000. That covers those related by blood or legal adoption, their lineal descendants, and the spouses of any of them.1

Everyone else pays 15 percent over $25,000. Unrelated heirs and the most distant relatives get the smallest exemption and the top rate.1

Because each class has both an exemption and a rate, a modest inheritance to close family often produces no Nebraska inheritance tax at all.1

What About Medicaid Estate Recovery?

This is a separate process people often confuse with the inheritance tax, so it is worth drawing the line clearly.

If the person who died received certain long-term-care benefits through Medicaid, the state may seek repayment from their estate after death. That is Medicaid estate recovery, and it is not a tax. It is the state recouping what it spent on someone's care, and it can reduce or wipe out what heirs receive before any inheritance tax question even arises.

Both can touch the same estate, but they answer different questions. The inheritance tax depends on who inherits; estate recovery depends on what care the deceased received. If you are settling an estate where the person was on Medicaid, treat them as two separate matters.

Next Steps

The planning lesson in Nebraska is that exemptions do real work, so the relationship and the size of each gift both matter.

• Map each heir to a class. Immediate relatives, siblings included, get the $100,000 exemption and the 1 percent rate; more distant heirs get less.1
• Ask where to file. Administration runs through the counties, so confirm with the estate's attorney or the probate court where the return goes.
• Coordinate with the estate plan, and separate it from estate recovery. A Nebraska estate attorney can model the bill; if Medicaid paid for care, handle that claim on its own track.

For families weighing how an inheritance fits into paying for a parent's care, our guides on building a senior care funding plan and selling or renting a home for care walk through the money side in plain terms.

Learn More

Find personalized help understanding how an inheritance affects your family's care plan at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.