Nebraska Inheritance Tax (2025): Rates, Exemptions, Who Pays & How to Plan

Sep 8

4 min read

514

Updated Sept. 9, 2025

Nebraska courthouse and cornfield at sunset with scales of justice—visual for estate planning, probate, and inheritance tax.

Nebraska is one of the few states with an inheritance tax, meaning the beneficiary may owe tax based on how much they receive. The tax rate is based on their relationship to the deceased person. Below is a plain-English guide with the current 2025 rules, examples, due dates, and planning tips for Nebraska farm and rural families.

At-a-glance: Nebraska inheritance tax today

Spouses are fully exempt. For everyone else, exemptions and rates depend on the relationship to the decedent:

Beneficiary class	Exemption	Tax rate above the exemption
Parents, grandparents, siblings, children	$100,000	1%
Nieces/nephews, aunts/uncles, other lineal descendants	$40,000	11%
All others (friends, neighbors, etc.)	$25,000	15%

These statewide rules are set by statute; counties administer and receive the tax.

Heads-up on proposals: Lawmakers considered reducing the tax in 2025 (including raising the Class I exemption to $150,000 and lowering other rates), but that package stalled. Until a new law passes, the table above remains in effect.

Who pays, and how is it filed?

Inheritance tax is assessed in the county where the decedent lived. It’s typically determined either during probate or in a separate county-court proceeding if there’s no probate (for example, when assets pass by trust or beneficiary designation). After the court sets the amount, payment is made to the county treasurer.

Standard court paperwork includes a Petition for Determination of Inheritance Tax and related notices. Your attorney handles the filings and coordinates with the county attorney.

When is it due? (And what if we’re not ready?)

Inheritance tax is due within 12 months of the date of death. If unpaid after that, interest accrues at the statutory rate and penalties can apply. Counties can also accept tentative payments to stop interest while values are finalized.

What property is taxed—or not?

Nebraska taxes most property that passes at death regardless of how it transfers (by will, trust, joint tenancy, POD/TOD, etc.). Life estates, annuities, and remainders are valued under Nebraska’s rules (which incorporate federal valuation tables).

Often-exempt items include: transfers to a surviving spouse; gifts to qualified charities; real estate located outside Nebraska; and most life-insurance proceeds not payable to the estate. (Insurance payable to the estate is generally taxable.)

Quick examples (how the math works)

Child inherits $300,000 → first $100,000 exempt; 1% on $200,000 = $2,000.
Nephew inherits $60,000 → first $40,000 exempt; 11% on $20,000 = $2,200.
Friend inherits $50,000 → first $25,000 exempt; 15% on $25,000 = $3,750.

Do TOD deeds or trusts avoid inheritance tax?

No. A trust or TOD/POD beneficiary designation can avoid probate, but inheritance tax still applies to transfers at death unless an exemption applies. That’s because Nebraska taxes many transfers that take effect at death “in trust or otherwise.”

Ag-specific notes for farm & ranch families

Multiple parcels / mixed ownership: Titling choices (individual, LLC, trust, joint tenancy) can change who pays and the amount—but don’t eliminate the tax.
Entity interests: Membership interests in a farm LLC are valued and taxed based on who inherits them.
Charitable or family-entity plans: Charitable bequests are usually exempt; carefully drafted operating agreements and buy-sells can simplify valuation and cash-flow at death.

For real-life translation, let's say a Nebraska farm family uses a Transfer-on-Death (TOD) deed and assumes they’ve avoided taxes. The estate has two quarters of land (valued at $8,000 per acre), and splits them so a sister and a nephew each receive one of them ($8,000 * 160 = $1,280,000). Under the Nebraska inheritance tax, the sister (Class I) owes 1% on $1,180,000 after her $100,000 exemption—$11,800. The nephew (Class II) owes 11% on $1,240,000 after his $40,000 exemption—$136,400. Same asset value, different beneficiary classes, very different bills—handled in county court and paid to the county treasurer. If appraisals are still pending, a tentative payment can stop interest.

Moral: A TOD deed may avoid probate, but it doesn’t avoid inheritance tax—and planning early (through trusts, LLCs, funding, and cash flow) keeps surprises off the kitchen table.

What to do after a death (simple checklist)

Inventory assets (including out-of-state land, insurance payees, beneficiary accounts).
Open probate or file a separate inheritance tax proceeding in the county court.
Agree on values with the county attorney; consider a tentative payment to cut interest if values are still pending.
Pay the assessed tax to the county treasurer and keep court receipts for title work/closing letters.

Need help?

Midwest Ag Law helps Nebraska families map out inheritance-tax exposure, structure LLCs and trusts, and file county-court paperwork—with transparent flat fees. If you’ve had a death in the family, or want to plan ahead, book a session and we’ll put clear numbers to your situation.