Competing Inheritance Tax Bills Advance

By Gordon Hopkins Two competing inheritance tax proposals have advanced to the general file in the Nebraska Legislature. Each bill could end up having very different impacts on county budgets, depending on which, if either, ultimately prevails The elimination of inheritance tax has been a goal of a great many legislators for many years. The sticking point has always been how much counties, particularly rural counties, depend on that revenue to operate. Amendment LR13CA would eliminate the tax entirely.Senator Bob Hallstrom (R-District 1), who introduced the amendment, has said, “We are trying to grow Nebraska and keep citizens here, but because of this tax they may choose to move to another state to avoid placing a tax burden on their loved ones after passing.” If passed by the Legislature, LR13CA would appear on the November 2026 general election ballot.However, LR13CA does not offer any replacement for the lost revenue. This is a great concern to local county governments that depend on that revenue to operate. An alternative bill being offered is LB468, which would reduce, but not eliminate, inheritance tax. Unlike LR13CA, this bill also provides alternative revenue sources. Jefferson County Commissioner Mark Schoenrock made very clear his support for LB468 and opposition to LR13CA. Schoenrock submitted written testimony to the legislature, “Nobody likes inheritance tax, but the facts are that Nebraska counties depend on it as a significant source of our revenue to provide essential services to our fellow citizens. If it is eliminated, we have two choices: cut critical services or raise property taxes. We have worked long and hard with Senator Clements and Governor Pillen for a much better alternative in LB 468 to identify solutions to significantly cut the inheritance tax and ensure that Nebraska county government retains the revenue needed to provide essential services to our citizens. When I last campaigned for re-election, I knocked over a thousand doors and the overwhelming message from my constituents was that although they would prefer a reduction in their taxes, they do not want the critical services provided by county government to be cut.” The Nebraska Association of County Officials (NACO) is opposed to LR13CA, as noted in NACO's March 2025 legislative report, “All county officials are urged to contact members of the Revenue Committee and their own senators to express opposition to the constitutional amendment. Tell them how your county uses inheritance taxes and the property tax increases or cuts in services that might result from eliminating inheritance taxes without sustainable replacement revenue. Statewide, counties collect more than $90 million annually in inheritance taxes.”

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