Nebraska's county-collected inheritance tax — and what the 2022 reform actually changed.

A retired farmer in Hall County dies in 2026, leaving his $750,000 estate to his two grown children and to his younger sister’s daughter — his niece — who helped him through his last years. The children, as Class A beneficiaries, owe Nebraska nothing on their $300,000 shares (well within the $100,000 per-beneficiary exemption; actually, $300,000 minus $100,000 generates $2,000 of Class A tax). The niece, inheriting $150,000 as a Class B beneficiary, owes approximately $12,100 — 11% of the $110,000 above her $40,000 exemption. Before the 2022 reform, the niece’s bill would have been substantially higher and the children’s modest bill would have started at a lower threshold. The reform mattered.

Nebraska is one of six states that still imposes an inheritance tax in 2026, alongside Kentucky, Maryland, New Jersey, and Pennsylvania.1What makes Nebraska’s tax structurally distinctive isn’t the rate schedule or the class system — those are conventional — but the collection mechanism. Nebraska is the only US state where the inheritance tax is collected county-by-county through the County Court rather than at the state level. The county where the decedent was domiciled keeps the revenue. The County Court — not the Nebraska Department of Revenue — is the operational entry point. For a state historically skeptical of central administration, this is a characteristically Nebraskan arrangement.

In 2022, the Legislature passed LB 310 (Stinner), the most significant liberalization of the Nebraska inheritance tax in decades. The reform cut top rates across all three relationship classes and raised exemptions substantially — the Class A exemption went from $40,000 to $100,000 per beneficiary, the Class B exemption from $15,000 to $40,000, and the Class C exemption from $10,000 to $25,000.2The changes took effect for deaths occurring on or after January 1, 2023. For Nebraska families whose intended beneficiaries aren’t all Class A, the post-reform exposure is meaningfully smaller than the pre-reform exposure, but it remains real.

This piece walks through the three-class structure after the 2022 reform, the county-by-county filing mechanics that distinguish Nebraska from peer inheritance-tax states, the 12-month interest clock that catches families who didn’t know it existed, and the planning moves available for families with substantial Class B or C exposure.

The three relationship classes after the 2022 reform

Nebraska sorts every beneficiary into one of three classes based on relationship to the decedent. The class determination drives both the per-beneficiary exemption and the applicable rate. The exemptions described below all reflect the post-LB 310 values for deaths on or after January 1, 2023.

The surviving spouse: fully exempt

Before walking through the three classes, the spousal exemption deserves its own line. The surviving spouse is fully exempt from Nebraska inheritance tax regardless of inheritance amount. This has been true throughout the modern history of the tax and was unchanged by the 2022 reform. A Nebraska decedent leaving the entire $5 million estate to a surviving spouse generates zero inheritance tax. The spousal exemption operates outside the Class A/B/C structure described below.

Class A: immediate relatives, $100,000 exemption, 1% rate

Class A includes:3

• The decedent’s children (biological, adopted, and stepchildren)
• Parents and grandparents
• Grandchildren and other lineal descendants
• Siblings (full- and half-blood)

Class A beneficiaries pay 1% on the inheritance value above $100,000. The exemption is per beneficiary, not per estate. For a parent leaving $500,000 equally among five children, each child inherits $100,000, all within the exemption, so the total Nebraska inheritance tax is zero. For a parent leaving $500,000 to one child, the child inherits $500,000, the first $100,000 is exempt, and 1% of the remaining $400,000 produces $4,000 of Nebraska inheritance tax. The Class A rate is the lowest of any inheritance-tax state in the country; combined with the substantial exemption, the practical Class A burden in Nebraska is minimal for most family estates.

Class B: remote relatives, $40,000 exemption, 11% rate

Class B includes:4

• Aunts and uncles
• Nieces and nephews
• The lineal descendants of nieces and nephews

Class B beneficiaries pay 11% on the inheritance value above $40,000. For a niece inheriting $150,000, the tax is 11% of $110,000 — about $12,100. For an aunt or uncle inheriting $300,000, the tax is 11% of $260,000 — about $28,600. Before the 2022 reform, the top Class B rate was 13% and the exemption was $15,000; on a $150,000 niece inheritance, the pre-reform tax would have been approximately $17,550. The 2022 reform cut the niece’s bill by roughly $5,400.

Class C: all others, $25,000 exemption, 15% rate

Class C includes everyone not in Class A or B:5

• Cousins (first, second, and more distant)
• Great-nieces and great-nephews
• Unmarried partners (no common-law marriage in Nebraska)
• Friends and unrelated individuals
• Stepgrandchildren in some circumstances

Class C beneficiaries pay 15% on the inheritance value above $25,000. For a longtime friend inheriting $100,000, the tax is 15% of $75,000 — $11,250. For an unmarried partner of thirty years inheriting $300,000, the tax is 15% of $275,000 — $41,250. Before the 2022 reform, the top Class C rate was 18% and the exemption was $10,000; on the same $300,000 unmarried-partner inheritance, the pre-reform tax would have been approximately $52,200. The reform cut the partner’s bill by roughly $10,950 — a meaningful reduction, but still a substantial liability for a beneficiary often treated by the decedent as functional family.

The county-by-county collection mechanism

What makes Nebraska’s inheritance tax structurally distinctive isn’t the rate schedule but the collection mechanism. In every other US inheritance-tax state, the tax flows to the state general fund through a centralized department of revenue. In Nebraska, the tax is collected by the County Court of the decedent’s county of domicile, and the revenue is retained by that county.6 The arrangement has several practical implications.

The County Court is the filing entry point

The Nebraska inheritance-tax return (Form 500) is filed with the County Court rather than the Department of Revenue. The court determines the tax due, the county treasurer’s office collects payment, and the county retains the revenue. For a Nebraska estate with property in multiple counties (a residence in Lancaster County, farmland in Sarpy County, a vacation cabin in Cherry County), a separate inheritance-tax determination may be required in each county where real property is situated. The personal representative coordinates filings across the relevant counties.

The county treasurer collects payment

Once the County Court determines the tax, the county treasurer’s office is the collection point. Payment by the personal representative (or directly by the beneficiary) is made to the county treasurer, who issues a receipt evidencing payment. The receipt is necessary to clear inheritance-tax liens against estate property before distribution.

Practical variation across counties

Because each County Court operates somewhat independently in administering the tax, families may encounter modest variation in procedure across Nebraska’s 93 counties. The substantive law is uniform statewide — the rates, exemptions, and class definitions are all set by state statute — but the documentation requirements, processing times, and customary practices can vary. Nebraska estate-planning attorneys with multi-county practices generally know the local variations; a family administering an estate in an unfamiliar county may want local counsel for the inheritance- tax filing.

The 12-month interest clock

Nebraska inheritance tax is due 12 months from the date of death, with interest accruing on unpaid amounts thereafter at the Nebraska statutory deficiency rate.6This is shorter than Kentucky’s 18-month deadline and longer than the federal estate-tax 9-month deadline. Three points about the 12-month clock are worth attention:

• The clock runs regardless of probate timing. Probate^? in Nebraska under Neb. Rev. Stat. Chapter 30 commonly takes 9 to 18 months for a typical estate. The 12-month inheritance-tax clock doesn’t pause for probate proceedings. If probate is contested or complex, the inheritance- tax deadline can pass before final asset valuation is complete. The personal representative may need to file a return based on best available information and amend later if valuations change materially.
• Interest is not a penalty — it’s statutory.Nebraska doesn’t treat late payment as a tax-evasion penalty unless there’s evidence of intent to avoid the tax; the interest charge is the standard consequence for missing the 12-month deadline. The rate is modest but compounds; on a $50,000 tax liability paid two years late, the interest adds up to a meaningful figure but not an existential one.
• Non-probate transfers are still subject to the clock.Nebraska inheritance tax reaches non-probate transfers — payable-on- death accounts, transfer-on-death deeds, beneficiary-designated retirement accounts, joint accounts passing by survivorship. The 12-month clock runs against these transfers too. A non-Class-A beneficiary who receives a TOD-deed transfer of Nebraska real property has an inheritance-tax obligation regardless of whether formal probate is opened.

The common edge cases

Several family configurations don’t fit neatly into the three-class structure, and the determinations have dollar consequences.

Stepchildren

Stepchildren are Class A in Nebraska — treated the same as biological and adopted children for inheritance-tax purposes. This is a meaningful distinction from some peer states where stepchild treatment was historically harsher. A Nebraska decedent with two biological children and one stepchild can leave the estate equally to all three without creating disparate tax treatment.

Unmarried partners

Nebraska does not recognize common-law marriage. An unmarried domestic partner of any duration is Class C for inheritance purposes — the highest-exposure category. This is where Nebraska inheritance tax most diverges from social expectation. A long-term unmarried partner inheriting $400,000 owes Nebraska approximately $56,250 (15% of $375,000) under the post-2022 rates. For Nebraska couples who intend to leave assets to each other but for whatever reason are not married, the inheritance-tax exposure is a first-order planning concern.

Half-siblings

Half-siblings are treated the same as full-blood siblings in Class A. The 2022 reform did not change this treatment; the broad Class A definition has historically included half-blood siblings, and they share the full Class A exemption and rate.

The non-resident decedent

Nebraska inheritance tax applies to the estates of Nebraska domiciliaries (on worldwide property, less property situated in other states and subject to their inheritance taxes) and to non-residents on Nebraska real and tangible personal property only. A Nebraska farm owned by a Wyoming domiciliary generates Nebraska inheritance-tax exposure for the beneficiaries even though the decedent never lived in Nebraska. Conversely, a Nebraska domiciliary who genuinely relocates to a no-inheritance-tax state before death (with a true domicile change, not just a Florida address) generally escapes Nebraska tax on intangible assets, though Nebraska real property remains within reach.

The 2022 reform in context

LB 310 was the most significant liberalization of the Nebraska inheritance tax since the modern rate structure was established. Several features of the reform deserve attention:

• Exemptions more than doubled across the board. The Class A exemption went from $40,000 to $100,000 (a 150% increase); Class B from $15,000 to $40,000 (a 167% increase); Class C from $10,000 to $25,000 (a 150% increase). For modest inheritances, the reform converted some taxable transfers into fully exempt ones.
• Top rates were cut. The Class B top rate dropped from 13% to 11%; Class C from 18% to 15%. The cuts are meaningful for larger inheritances where the higher rates dominate the calculation.
• The Class A rate was preserved at 1%.The 1% rate for immediate-relative inheritances above the exemption was not changed. The combination of the raised exemption and the unchanged 1% rate means most Class A inheritances in Nebraska now generate zero tax; only the larger Class A inheritances generate any tax at all, and at a modest rate.
• The structure was preserved.The reform didn’t restructure the tax or move to a different model (an estate tax, for instance, or a flat rate across all beneficiaries). The relationship-class structure was preserved and modernized, not replaced.

The four planning moves

For Nebraska families with substantial Class B or C exposure, four planning approaches close most of the practical liability.

1. Lifetime gifting (no Nebraska gift tax)

Nebraska has no state gift tax. The federal annual-exclusion gift ($19,000 per recipient in 2026) and lifetime exemption gift can be made to Class B or C beneficiaries during life without generating any Nebraska tax. For a Nebraska aunt with a favorite niece, a sequence of annual-exclusion gifts over 5 to 10 years can move substantial wealth outside the inheritance-tax base entirely. The federal gift-tax rules apply, but for gifts within the federal annual exclusion or lifetime exemption, no federal tax is due either.

2. Beneficiary designations and the per-beneficiary exemption

Because each Class A, B, and C exemption is per beneficiary, distributing assets across multiple beneficiaries within a class can significantly reduce or eliminate inheritance tax. A $300,000 life-insurance policy designated to a single niece (Class B) generates $28,600 of tax (11% of $260,000). The same $300,000 split among three Class B beneficiaries — the niece and two nephews — generates $19,800 of tax (each inherits $100,000, each has a $40,000 exemption, each pays 11% of $60,000 = $6,600 per beneficiary). The savings of $8,800 from three beneficiaries instead of one is substantial. Beneficiary-designation choices on financial accounts and life-insurance policies are the highest-leverage planning move for many Nebraska families.

3. Irrevocable trusts established with sufficient runway

Assets transferred to an irrevocable trust during life are generally outside the Nebraska inheritance-tax base for the donor’s subsequent death, subject to certain look-back provisions for transfers within a defined period before death. The mechanism requires careful drafting, attention to retained-interest rules, and trust funding that doesn’t leave the donor underwater on long-term needs. For Nebraska families with significant Class B or C exposure, an irrevocable trust funded with appropriate runway can functionally eliminate the Nebraska inheritance-tax liability on the trust assets.

4. Life insurance to provide tax-payment liquidity

When the inheritance going to a Class B or C beneficiary includes illiquid assets — farmland, a family business interest, real property — the inheritance tax must be paid within 12 months of death, but the assets may take longer to liquidate. A modest life-insurance policy owned outside the estate (in an irrevocable life-insurance trust, or ILIT) can provide the cash the beneficiary needs to pay the inheritance tax without forcing a sale of the underlying assets. The approach doesn’t reduce the tax; it provides liquidity to pay it. For Nebraska farm families intending to keep the farm in the family across generations, this is often the highest-leverage move available.

Aging-parent considerations

For Nebraska families with an aging parent, several features of the inheritance-tax system shape practical planning:

• The financial power of attorney matters.Lifetime-gifting strategies require a parent with capacity to make the gifts, or a properly-drafted financial POA that authorizes the agent to make gifts on the parent’s behalf. The Nebraska Uniform Power of Attorney Act requires explicit gift-making authority in the POA document; general powers don’t include it. Pair the financial POA with a Nebraska healthcare power of attorney^? so both surrogate-decision-making roles are covered before incapacity.
• Nebraska Medicaid estate-recovery operates against the probate estate. For Nebraska parents who received Medicaid LTC services, the recovery can consume the estate before the inheritance tax ever applies. The recovery and inheritance tax interact: inheritance tax is generally paid before Medicaid recovery, but both apply to the same estate. The interaction is the kind of detail where Nebraska counsel materially reduces execution risk.
• The Nebraska homestead protections are limited in death. Nebraska’s homestead^? exemption protects the family residence from most creditor claims during life and provides some protection during the surviving spouse’s life, but it does not provide an inheritance-tax exemption for the residence. A Nebraska home left to a non-Class-A beneficiary is fully within the inheritance-tax base at fair-market value.

What to do for an at-risk Nebraska family

If your Nebraska parent’s intended heirs include Class B or C beneficiaries:

• This month:Map every intended beneficiary to Class A, B, or C. The categorization is fact-based; in most families it’s obvious once mapped.
• This quarter: Estimate the inheritance-tax exposure on each non-Class-A bequest using the post-reform exemptions and rates ($40,000 / 11% for Class B, $25,000 / 15% for Class C). The total is the planning target.
• This year:If the exposure is material (more than a few thousand dollars), a consultation with a Nebraska estate-planning attorney is warranted. The planning toolkit — lifetime gifting, beneficiary designations spread across more beneficiaries, irrevocable trusts, ILIT-owned life insurance — can close most of the exposure but requires runway and professional drafting to execute properly.

The bottom line

Nebraska’s inheritance tax is structurally unusual in two ways: it is the only US inheritance tax collected at the county level rather than the state, and it was substantially liberalized by the 2022 LB 310 reform — the most significant change to the tax in decades. For typical Nebraska family estates passing to a surviving spouse and to Class A children, the post-reform tax is minimal or zero. For families where the intended beneficiaries include nieces, nephews, cousins, unmarried partners, or longtime friends, the tax remains real, though meaningfully smaller than before 2023. The 12-month payment clock, the county-court filing path, and the per-beneficiary exemption structure each shape the planning conversation. The most common Nebraska family mistake we see is treating the inheritance tax as fully repealed (it wasn’t) or as unchanged from its pre-2022 form (it was substantially changed). Both readings miss the actual structure. For Nebraska families with non-immediate beneficiaries, the planning lever is still available, the toolkit is still standard, and the conversation is still worth having while there’s runway to act on it.