Nebraska Legislature Advances Inheritance Tax Cuts, Fee Increases

Nebraska lawmakers have advanced a bill, LB468, that would reduce the state's inheritance tax rates and increase the exemption thresholds, aiming to bring Nebraska more in line with the majority of states that do not levy such a tax. The bill, sponsored by Sen. Rob Clements, proposes lowering the tax to 1% for immediate family members and 3% for distant relatives and non-relatives, while raising exemption amounts, but does not eliminate the tax entirely. To offset the expected loss in county revenue—inheritance taxes currently make up a significant and fluctuating portion of county budgets—the bill would increase a range of county fees and shift some of the tax burden to broader sources like vehicle inspections and marriage licenses. Supporters argue the changes would make Nebraska more attractive to residents and stem the outmigration of retirees, while critics contend the bill shifts the tax burden onto a wider population and disproportionately affects lower-income Nebraskans. The Nebraska Association of County Officials supports the measure as a step toward more stable county funding, but some lawmakers remain concerned about its regressive impact. Despite its advancement, the bill stops short of eliminating the inheritance tax, a long-term goal for some legislators.