Nebraska is one of six states that imposes an inheritance tax when a resident of Nebraska, or an owner of land located in Nebraska, passes away. Spouses and charities are exempt. For transfers to other immediate family members, namely parents, siblings, children, and grandchildren, the inheritance tax rate is 1% on the value of the property that passes to each person over an exemption amount of $40,000 per person. For transfers to remote relatives (e.g., aunts, uncles, nieces, and nephews), the inheritance tax rate is 13% on amounts over an exemption amount of $15,000 per person. For transfers to unrelated people, including unmarried significant others, the inheritance tax rate is 18% on amounts over an exemption amount of $10,000.
This session, the Nebraska Unicameral passed a bill that changes the rates and exemption amounts, which Governor Pete Ricketts signed into law on February 17, 2022. The new law applies to inheritance tax for deaths occurring on or after January 1, 2023. Spouses and charities will continue to be exempt from paying Nebraska inheritance taxes. The inheritance tax on transfers to immediate family members will remain at 1%, but the exemption amount will be increased to $100,000 per person. The inheritance tax rate on transfers to remote relatives will be reduced from 13% to 11%, and the exemption amount will increase to $40,000 per person. For transfers to unrelated people, the inheritance tax rate will be reduced from 18% to 15% and the exemption amount will be increased to $25,000 per person. Starting in 2023, regardless of the relationship to the decedent, no inheritance tax will be assessed to transfers of assets to individuals aged twenty-one (21) years or younger.
If you have questions as to how the change in this law may affect your estate or succession planning, we will be happy to talk with you so that we may address your specific situation.
