Efforts to eliminate inheritance tax expected during 2023 Nebraska legislative session
KEARNEY, Neb. — At this year’s legislative session, lawmakers could repeal the state’s unpopular inheritance tax.
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"We are going to try to eliminate it. It's a really big deal, especially for rural Nebraska, farmers and ranchers," said Sen. Teresa Ibach, District 44.
State Sen. Tom Briese will serve on the revenue and the education committee this year. He told NTV News there will be an effort to eliminate the inheritance tax.
“But if we do that, we have to be conscious of the importance of the inheritance tax to the counties," Sen. Briese said. "The elimination of the inheritance tax can lead to a property tax increase and if we are going to eliminate it, I would push for requiring the state to replace those dollars so it doesn’t lead to a property tax increase. We should replace those dollars with state reimbursement, with state support to replace those dollars otherwise it puts the counties in a predicament.”
Many counties use the inheritance tax money as a key revenue source, or an emergency fund. The Buffalo County Treasurer’s Office said they collected around $1.7 million in inheritance tax last year.
“If something comes up, say like a major trial, or if a bridge comes down or a road project, something we can use some funds on, we can dip into that. This is the fund that we can use for those types of emergencies," said Buffalo County Board of Commissioners Chair Ivan Klein.
Klein also mentioned the concern about eliminating the inheritance tax resulting in the increase of property taxes.
“I mean it's got to come from somewhere," he said. "Unfortunately the only taxes that we have control on is the property tax. The county still needs to have a certain amount of money to operate on, and we don’t have many places we can get it from. We have so many roads out there and not near enough to go around, everybody wants us to do more, but we don’t have the money to work on it. If you take one more avenue away, it will be just harder."
Iowa decided to end their inheritance tax in 2021, leaving Nebraska to be one of only five other states with inheritance tax. The other four are Kentucky, Maryland, New Jersey and Pennsylvania.
The Platte Institute is an advocate for the state to repeal the inheritance tax.
“Nobody knows how much revenue is going to come by each year, so it’s a very unreliable source of income that county officials shouldn’t be counting on," said Platte Institute Chief Executive Officer Jim Vokal.
In December 2021, the Platte Institute surveyed 812 registered voters in Nebraska. They answered seven questions on inheritance taxes. The results show that the majority of people surveyed, regardless of political preference, favor the ending of the inheritance tax.
“We pushed for a full repeal of the tax last year, we were unable to get that across the finish line, but we did get the rates lower, and if you are under 21 you no longer have to pay the inheritance tax in the state of Nebraska, but we will continue our push for a full repeal," Vokal said.
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Vokal explained LB310, introduced by Sen. Rob Clements which passed with a 37-1 vote, eliminated the inheritance tax for heirs 21 and under. The bill also increased the amount of property exempt from inheritance taxes and reduced tax rates.
"Imagine if you are passing down a family farm to a relative or a person who works on the farm who might not be a relative, or if you are a middle class family that’s inheriting a house," Vokal said. "This is a destructive tax and we should not being penalizing Nebraska tax payers for inheriting assets and property we already payed taxes on in the past.”
