Nebraska Estate Tax: Inheritance Rates, Deadline, and Exemptions

Nebraska does not have a state estate tax, but it is one of a handful of states that still charges an inheritance tax, which is paid by each beneficiary based on what they receive and how they were related to the person who died. Rates run from 1% for close family to 15% for unrelated heirs, with surviving spouses fully exempt. A separate federal estate tax can also apply, though only to estates above $15 million in 2026.

No State Estate Tax Since 2007

Nebraska repealed its estate tax through Legislative Bill 367, and the repeal covers everyone who died on or after January 1, 2007.¹ So the personal representative of a Nebraska estate does not file a state estate tax return based on the total value of what the deceased owned.

What Nebraska kept is different. An estate tax is charged against the estate as a whole before anything is distributed. An inheritance tax is charged to each individual beneficiary based on their share. Nebraska dropped the first and kept the second, which is why the tax bill on a Nebraska estate depends heavily on who inherits, not just how much is being passed down.

Inheritance Tax Rates by Relationship

Nebraska sorts beneficiaries into three groups. Legislative Bill 310, which applies to deaths on or after January 1, 2023, raised the exemption amounts and cut some of the rates.²

Immediate Relatives

Parents, grandparents, siblings, children, and other lineal descendants of the deceased, along with the spouses of those relatives, fall into the closest tier. Each person in this group gets a $100,000 exemption, and anything above that is taxed at 1%.³ A daughter who inherits $250,000 from her mother pays 1% on $150,000, or $1,500.

Remote Relatives

Aunts, uncles, nieces, and nephews by blood or legal adoption, their descendants, and their spouses make up the second tier. The exemption is $40,000 per person, and the rate above that is 11%.⁴ A nephew inheriting $100,000 owes 11% on $60,000, or $6,600.

Beneficiaries in this tier who are under 22 at the time of the decedent’s death owe no inheritance tax at all, whatever the amount.⁴

Everyone Else

Friends, unmarried partners, business associates, and anyone who does not fit either of the first two tiers are in the broadest category. The exemption is $25,000, and the rate on the rest is 15%. A friend who inherits $75,000 owes 15% on $50,000, or $7,500. This is where Nebraska’s inheritance tax hits hardest, and it often catches families off guard when a will leaves meaningful bequests to non-relatives.

Surviving Spouse

Property passing to a surviving spouse is completely exempt from Nebraska inheritance tax, no matter the amount.³ The exemption applies whether the transfer runs through a will, joint ownership, a trust, or any other mechanism. Most married couples can put off inheritance tax questions entirely until the second spouse dies.

What Property Counts

The inheritance tax reaches most property interests that transfer at death, whether through a will, trust, deed, joint ownership, or a transfer made in contemplation of death.⁵ A few categories cause the most confusion.

Jointly held property. Adding a child to a bank account does not shield it from the tax. The full value of jointly held property is presumed taxable unless the surviving co-owner can document what they personally contributed.⁵ A parent who funded the whole balance leaves the whole balance taxable; a child who can prove they deposited half is taxed only on the parent’s half.

Revocable trust assets. A revocable living trust avoids probate but does not avoid inheritance tax. Assets pass to trust beneficiaries at the grantor’s death and are taxed based on who receives them, the same as if they passed under a will.

Life insurance. Proceeds paid directly to a named beneficiary are exempt. Proceeds payable to the decedent’s estate are not, because the money joins the estate and is taxed based on who ultimately inherits it. Naming a person rather than “my estate” as beneficiary avoids the problem.

Charitable gifts. Property left to qualifying religious, charitable, or educational organizations is exempt under section 77-2007.04, and those amounts drop out of the inheritance tax calculation.

The 12-Month Deadline and How to Pay

Nebraska inheritance tax is due within 12 months of the date of death.⁶ Miss it and interest runs at 14% a year on the unpaid balance.⁷ Filing a probate application or a tax petition within the 12-month window stops the penalty from accruing while the final number is being worked out.

The usual path: the personal representative files a petition for determination of inheritance tax in the county court where the deceased lived. The court reviews the asset values and the beneficiary classifications, then issues an order setting the tax owed. Payment goes to the county treasurer. Until the tax is paid, it sits as a lien on any real property in the estate, so it has to be cleared before title can transfer clean.⁵

If valuation is going to take time, Nebraska allows a tentative payment. Beneficiaries submit a written application to the county court, get the county attorney’s consent, and pay an estimate to stop the 14% interest from running.⁸ If the tentative amount turns out to be more than the court finally sets, the overpayment is refunded, though without interest.

The Federal Estate Tax Still Applies

No state estate tax does not mean no estate tax. For 2026, the federal estate and gift tax exemption is $15 million per person, raised by the One, Big, Beautiful Bill Act signed on July 4, 2025.⁹ Married couples can shelter up to $30 million between them by using portability of any unused exemption from the first spouse to die.

Above the exemption, the taxable portion is subject to an effective 40% rate.¹⁰ Very few Nebraska estates reach that threshold. The tax is figured on the gross estate — real estate, investments, retirement accounts, business interests — minus deductions for debts, expenses, and charitable bequests.

The federal annual gift tax exclusion is $19,000 per recipient for 2026.¹¹ Gifts up to that amount do not count against the lifetime exemption and are not reportable. Lifetime gifting can shrink both the taxable estate and the eventual Nebraska inheritance tax bill by reducing what each beneficiary will one day receive.

Step-Up in Basis on Inherited Property

Heirs get an important federal break that has nothing to do with Nebraska inheritance tax. When you inherit property, your cost basis for capital gains purposes is reset to the fair market value on the date the owner died, not what they originally paid.¹² A house bought for $80,000 and worth $300,000 at death gives the heir a $300,000 basis. Selling for $310,000 produces $10,000 of taxable gain, not $230,000.

The step-up applies whether or not the estate owes any inheritance or estate tax. If the estate is large enough to file a federal estate tax return, the basis you claim later has to match the value reported on that return, and using an inflated figure can bring accuracy-related penalties.¹²

1
Nebraska Legislature. Nebraska Code 77-2101.01 – Estate Tax; Imposed; Amount
2
Nebraska Legislature. Legislative Bill 310
3
Nebraska Legislature. Nebraska Code 77-2004 – Inheritance Tax; Rate; Transfer to Immediate Relatives; Exemption
4
Nebraska Legislature. Nebraska Code 77-2005 – Inheritance Tax; Rate; Remote Relatives; Exemption
5
Nebraska Legislature. Nebraska Code 77-2002 – Inheritance Tax; Property Taxable; Transfer in Contemplation of Death
6
Nebraska Legislature. Nebraska Code 77-2010 – Inheritance Tax; When Due; Interest; Bond; Failure to File; Penalty
7
Nebraska Legislature. Nebraska Code 45-104.01 – Interest Rate on Delinquent Tax Payments
8
Nebraska Legislature. Nebraska Code 77-2018.07 – Inheritance Tax; Tentative Payment of Tax; Procedure
9
Internal Revenue Service. What’s New – Estate and Gift Tax
10
Congress.gov. The Estate and Gift Tax: An Overview
11
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
12
Internal Revenue Service. Gifts and Inheritances