Revenue Committee proposes larger inheritance tax exemptions
The Nebraska Legislature’s Revenue Committee has advanced an amended version of Sen. Robert Clements’ Legislative Bill 310, which seek to reduce Nebraska’s county inheritance tax. While scaling back the scope of the tax reductions, the amendment still more than doubles Nebraska’s inheritance tax exemptions, while reducing the highest rates.
For class one beneficiaries (immediate family) the exemption is increased from $40,000 to $100,000 and the rate remains at 1%. For class two beneficiaries (distant relatives) the exemption amount is increased from $15,000 to $40,000 and the tax rate is reduced from 13% to 11%. For class three (all others) the exemption amount is increased from $10,000 to $25,000 and the tax rate is reduced from 18% to 15%.
The amendment also makes one change that is more ambitious than the original bill. Young people under 22 years of would no longer have to pay inheritance tax in Nebraska. Current law does not make any exception for children or minors that inherit money or property, even from their parents.
The amendment also adds reporting requirements to give the Legislature information about inheritance tax collections. This is a huge win because there has never been a reporting requirement for this tax in its 120-year history.
Moving forward, the report submitted to the Department of Revenue will breakdown how much inheritance tax revenue is collected by each class of beneficiary and the number of people in each class who received property subject to the tax, both in state and out of state.
With this amendment, the bill was voted out of committee and has been placed on General File. Currently the bill has seven co-sponsors, and it has not yet been scheduled for floor debate by the entire Legislature.