In Nebraska, the inheritance tax is collected by the county, not the state, and a close relative pays just 1 percent.
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?
- Frequently Asked Questions
- Next Steps
Nebraska Inheritance Tax at a Glance
Here is the short version. Nebraska does not tax your estate. It taxes certain people who inherit from you, the rate depends on their relationship to you, and unlike most states, the tax is administered and collected at the county level.
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.
A reform known as LB 310 reshaped the tax for deaths on or after January 1, 2023, lowering rates and raising exemptions. The figures in this guide reflect that current 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. Two heirs splitting the same estate can owe very different tax, because one was a child and the other was a distant cousin.
Nebraska has no estate tax. The county inheritance tax is the only state-level death tax in play.
And the federal government has no inheritance tax at all. It has only an estate tax, and that one reaches so few estates that most families never come near it. So for a Nebraska death, the county inheritance tax is usually the only death tax to think about.
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.
A surviving spouse is fully exempt, and so is any beneficiary under age 22. For everyone taxable, the structure is: immediate relatives and siblings (Class 1) pay 1 percent on amounts above $100,000; more remote relatives (Class 2) pay 11 percent above $40,000; and all other heirs (Class 3) pay 15 percent above $25,000.
Because the tax is county-administered, the return and payment go through the county where the estate is probated, not a central state office. The Nebraska Department of Revenue publishes the rules the counties apply. The closer the relationship, the larger the exemption and the lower the rate.
The Beneficiary Classes
| Beneficiary | Class | Exemption | Tax rate on the excess |
|---|---|---|---|
| Surviving spouse | Exempt | Full | 0% |
| Beneficiary under age 22 | Exempt | Full | 0% |
| Parents, children, siblings, other immediate relatives | 1 | $100,000 | 1% |
| Aunts, uncles, nieces, nephews, more remote relatives | 2 | $40,000 | 11% |
| All other heirs and unrelated people | 3 | $25,000 | 15% |
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.
Immediate relatives and siblings pay just 1 percent. Parents, children, siblings, and other close relatives owe only 1 percent, and only on the amount above a generous $100,000 exemption. An inheritance of $100,000 or less to this group is tax-free.
More remote relatives pay 11 percent over $40,000. Aunts, uncles, nieces, and nephews fall here.
Everyone else pays 15 percent over $25,000. Unrelated heirs and the most distant relatives get the smallest exemption and the top rate.
Because each class has both an exemption and a rate, a modest inheritance to close family often produces no Nebraska inheritance tax at all.
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 and siblings get the $100,000 exemption and the 1 percent rate; more distant heirs get less.
- Remember the tax is local. The return runs through the county where the estate is probated, not a state office.
- 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.
Sorting out an inheritance or planning your estate? Talk through your options with Brevy's care navigator.
Frequently Asked Questions
Yes. Nebraska has an inheritance tax, and it is unusual in that counties administer and collect it rather than the state. It is paid by certain heirs based on their relationship to the person who died, and a surviving spouse is exempt.
A surviving spouse is fully exempt, and so is any beneficiary under age 22. Beyond that, each taxable class has a dollar exemption, so immediate relatives owe nothing on the first $100,000 they inherit.
For deaths on or after January 1, 2023, immediate relatives and siblings pay 1 percent over a $100,000 exemption; more remote relatives pay 11 percent over $40,000; and all other heirs pay 15 percent over $25,000.
No. Nebraska has no estate tax. Its only death tax is the county-level inheritance tax, which falls on heirs rather than on the estate.
No. They are separate. The inheritance tax depends on the heir's relationship to the deceased, while Medicaid estate recovery is the state seeking repayment for long-term-care benefits it paid. Both can affect the same estate, but they are unrelated processes.
Learn More
- Nebraska Senior Property Tax Relief
- Nebraska Retirement Income Tax
- Which States Have an Estate or Inheritance Tax
- Building a Senior Care Funding Plan
- Selling or Renting Your Home for Care
- Medicaid Estate Recovery Explained
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.