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Nebraska revenue committee hears proposal to end inheritance tax; counties warn of budget shortfalls
Summary
A legislative report said LR 13 CA would place a constitutional amendment to eliminate Nebraskas inheritance tax before voters, prompting county officials to warn that, without replacement revenue, local governments could face higher property taxes or cuts to services. LB468 was presented as a revenue-neutral alternative.
The Legislatures Revenue Committee heard proposals this week to eliminate Nebraskas inheritance tax and to revise how inheritance taxes are collected and allocated.
County officials from across Nebraska contacted senators and testified in person in opposition to LR 13 CA, the proposed constitutional amendment that would, if enacted by the Legislature, place the question before voters in the November 2026 general election. The officials told the committee that inheritance-tax revenue currently funds bridges, emergency services, levy buydowns, reserves and other local projects.
Those officials warned that "without replacement revenue, taxpayers will either have to pay more property taxes or critical services will suffer cuts," the report said. Proponents of repealing the tax argued the change would make Nebraska more competitive, help retain retirees and make it easier to pass family farms to heirs; they also urged counties to find ways to limit spending.
As an alternative to the constitutional amendment, the report described LB468, introduced by Senator Rob Clements and designated his personal priority. According to the report, LB468 would reduce inheritance tax rates for extended-family and unrelated beneficiaries and propose replacement revenue through fee increases and reallocations of existing funds.
Neither measure has left committee; the report said both LR 13 CA and LB468 remain under consideration. The committee did not record a committee vote on either measure during the hearing summarized in the report.
