Proposal to reduce inheritance taxes stalls in Unicameral

By Brian Beach , Reporter Nebraska Public Media

May 13, 2025, 10 p.m. ·

Nebraska Capitol (Photo by Fred Knapp, Nebraska Public Media News)

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A proposal to reduce inheritance taxes and raise county fees came up two votes short of overcoming a filibuster attempt in the Nebraska Legislature Tuesday evening.

Sen. Rob Clements’ priority bill, LB468, as amended on the second round of debate, would have reduced the total amount of inheritance taxes Nebraska counties collect by around 24%, Clements said.

Nebraska is one of five states with inheritance taxes and eliminating them altogether has been a longtime goal for Clements.

“Reducing Nebraska's inheritance tax is a significant part of improving Nebraska's tax structure,” he said. “It also helps by preserving family assets and increasing private capital formation. Most importantly, the inheritance tax is a reason why many retirees leave the state, taking their savings with them.”

Nebraska has three tiers of inheritance taxes, which are determined by the relationship between the beneficiary and the person they are receiving the inheritance from.

If the beneficiary is the child, sibling, parent or grandparent of the deceased, they pay 1% of their inheritance value after a $100,000 exemption. More distant relatives pay 11% after a $40,000 exemption, while non-relatives pay 15% after a $25,000 exemption.

Clements’ bill advanced from the first round of debate with 27 votes, but some senators voiced concerns they wanted to see fixed.

Tuesday, Clements introduced an amendment aimed at addressing some of them.

The select file amendment no longer took money from the Site and Building Development Fund and the modernization tier of the ImagiNE Act. Senators had advocated for both state economic development programs during the first round of debate.

The inheritance tax reductions themselves were also scaled back. Instead of a reduction to a 3% tax after a $50,000 exemption, the two highest classes of inheritance taxes would have seen a 7% tax after a $40,000 exemption.

Clements said the proposal still would have benefited taxpayers and county governments alike.

He said he worked with the Nebraska Association of County Officials to help provide more consistent revenue that is not dependent on the number and wealth of people dying each year, which can vary widely.

“Most counties are unable to rely on this inconsistent tax for general fund budgeting,” Clements said. “They do use it for emergencies and special purchases. The replacement funds included in the amendment will continue this revenue and will be more consistent.”

But the proposal received pushback from several senators in the body, including Sen. Bob Andersen, who said he wants to get rid of the inheritance tax but opposed the fee increases in Clements’ bill.

“I see it as a tax shift, where it takes and it shifts the cost and the fees and the admin costs over to the population at large,” he said. “If somebody inherits a significant amount of money, they will not end up paying the tax, but the rest of the taxpayers thought the state will. And I think that's fundamentally a wrong.”

Other senators, like Sen. Danielle Conrad, said the bill would hurt working families and businesses in Nebraska the most.

“It replaces a progressive structure of taxation with a series of regressive fee increases and significant increases in taxes, particularly for businesses and businesses in the renewable energy sector,” Conrad said.

And Sen. Jane Raybould, a former Lancaster County Commissioner, recounted her experience with reductions in state aid to counties and said she was concerned the state would not be able to keep its commitment to the counties to provide revenue. She likened the situation to a scene from Charles Schulz’s classic cartoon.

“I feel a little bit like Charlie Brown in dealing with Lucy and the football,” Raybould said. “Lucy puts the football down, and Charlie Brown is ready to kick it off, and then at the last minute, she yanks it away. And I feel that is what the state has done.”

After four hours of discussion, all Democratic-affiliated senators in the officially nonpartisan Unicameral voted against ending debate, while Sens. Rob Dover and Merv Riepe were the only two Republican senators to join them. That left the bill’s supporters two votes short of the 33 votes needed to invoke cloture and take a vote on the bill itself, essentially ending the legislation’s chances of passing this session.