LINCOLN - Nebraska remains one of five states in the U.S. that imposes a tax on the relatives of the recently deceased. This year, state legislators are considering two proposals to either reduce that inheritance tax or even eliminate it outright - and now, both of those plans have advanced to the next stage of the legislative process.

Some call these two bills companion plans. Others consider them competing plans. But either way, both were advanced out of the revenue committee to general file this month, meaning the full Legislature will now have the ability to consider both ideas.

One of them, proposed by Bob Hallstrom of District 1, is a constitutional amendment that would give Nebraska voters the option to eliminate the inheritance tax entirely at next year's general election.

The other bill, proposed earlier this year by Rob Clements of District 2, set a flat rate that all relatives of a decedent would pay. That bill also provides a pathway to increase some fees to help offset financial losses county governments fear they would incur should revenue from the inheritance tax disappear.

This month, Clements' bill, LB468, was assigned an amendment, authored by the revenue committee's Elliot Bostar from District 29.
This plan adjusts the existing tiered system of inheritance tax payout, and essentially grandfathers the tax out, so that families of people who die over the next decade would pay less than they would now.

Under this amendment, direct relatives (e.g. parents, children, and siblings) of decedents dying between January 1, 2023 and January 1, 2027 would pay one percent of the clear market value of property received by each person in excess of $100,000 - this is in line with the existing inheritance tax rate. But the changes come as the years progress: the rate relatives pay would decrease if the decedent passes away in any successive year - and for those who pass away on or after January 1, 2036, their relatives would pay nothing. 

A similar pathway would be put in place for people more distantly related to a decedent. Once-removed relatives (e.g. aunts/uncles, nieces/nephews, or spouses) currently pay 13% on inherited property; that would decrease to 11% for relatives of those who die between 2023 and 2027, and annually decrease by 1.1 percentage points down to 0% by 2036. 

The third tier applies to "all other cases" of people collecting an inheritance. Those people currently pay an 18% tax; it would decrease to 15% for those who die between 2023 and 2027, and further decrease by 1.5 percentage points every year, eventually down to 0% by 2036. 

UPDATE - Thursday, April 24:

With the state government ready to consider these two separate plans to reduce or eliminate the state's inheritance tax, the Nebraska Association of County Officials on Thursday publicly opposed Bostar's proposed amendment to Clements' LB468, saying that amendment would eventually eliminate the inheritance tax and, with it, the up to ten percent of county governments' annual operating budget this tax helps to account for. 

"A complete repeal [of the inheritance tax] would be devastating to the essential services counties provide," NACO's Thursday release read in part. "At a time when support from state and federal governments is uncertain, this is not the moment to eliminate a critical revenue source that keeps our communities safe, connected, and functional."

After opposing his plan to eliminate the tax in 2024, NACO had worked with Clements on an earlier form of LB468 previously in 2025. Most notably from the counties' perspective, LB468 creates other sources of revenue - through increases in various fees, for example - to make up for what county governments stand to lose if the inheritance tax is removed. The organization, which represents counties of all sizes across the state, stood opposed last month Hallstrom's proposed amendment which would give voters the choice to eliminate the tax entirely at next year's election.

Under Hallstrom's proposed amendment to the state constitution, that tax rate would go to zero as soon as it's voted on by Nebraska citizens in 2026 and then ratified by the legislature.
The authors of these two bills have been supportive of the others' idea as both share the desire to eventually see this tax go away, but they have both acknowledged that the two plans cannot both be approved. Now they will each be considered by the wider state Legislature later this year.