Nebraska repealed its separate state estate tax in 2007, but Nebraska is one of seven states that imposes a separate state inheritance tax. Upon review of Nebraska's inheritance tax laws, I find them to be some of the most confusing laws I've come across during my survey of state estate and inheritance tax laws. Here is a summary of the current Nebraska inheritance tax laws which apply to residents and nonresidents who own real or personal property located in Nebraska:
- The Nebraska inheritance tax is administered by the county court of the county in which the decedent resided or in which real or personal property is located.
- Property passing to a surviving spouse is exempt from the inheritance tax.
- Property passing to an entity organized exclusively for religious, charitable, public, scientific, or educational purposes is exempt from the inheritance tax.
- There are three different classes of beneficiaries subject to the inheritance tax:
- Immediate Relatives - including parents, grandparents, siblings, children (including those legally adopted), any other lineal descendant (including those legally adopted), any person to whom the decedent for not less than ten years prior to death stood in the acknowledged relation of a parent, or the spouse or surviving spouse of any such persons. This class receives a $40,000 exemption and property valued over the exemption is subject to a 1% tax.
- Remote Relatives - including an uncle, aunt, niece, or nephew related to the decedent by blood or legal adoption, or other lineal descendant of the same, or the spouse or surviving spouse of any of such persons. This class receives a $15,000 exemption and property valued over the exemption is subject to a 13% tax.
- Other Transfers - All other beneficiaries receive a $10,000 exemption and property valued over the exemption is subject to an 18% tax.
- The inheritance tax is due and payable within 12 months of the decedent's date of death.
- For decedents dying on or after January 1, 2008, a penalty is assessed for failure to file the appropriate inheritance tax return.
This information is courtesy of the Nebraska Department of Revenue.
The bottom line - if you're a Nebraska resident and your estate is passing to someone other than your spouse, or if you're a nonresident who owns real estate and/or tangible personal property located in Nebraska and it's not passing to your spouse, then your beneficiaries may owe a Nebraska inheritance tax. Up next, New Jersey inheritance taxes.
For more on Nebraska inheritance taxes, refer to Overview of Nebraska Inheritance Tax Laws.
For more on Nebraska estate taxes, refer to Does Nebraska Collect an Estate Tax?
Update, Jan. 23, 2012: Nebraska Governor Proposes Repeal of Nebraska Inheritance Tax
- Nebraska Revised Statutes, Chapter 77, Revenue and Taxation - see 77-2001 et seq.
- Understanding Death, Estate and Inheritance Taxes
- State Inheritance Tax Chart
- How to Calculate Your Federal Estate Tax Liability
- How to Reduce or Even Eliminate Your Estate Tax Bill