Nebraska lawmakers advanced a bill on Tuesday that aims to reduce the state’s inheritance tax rates while finding new revenue sources to offset potential financial losses for counties. Sen. Rob Clements, a Republican from Elmwood, led the effort on LB 468.
It moved forward with a 27-10 vote after a long debate. Clements has long pushed for lowering or eliminating Nebraska’s inheritance tax. He says the bill will help keep retirees in the state.
Nebraska is losing retirees faster than we are gaining population from other states,” Clements said. Our inheritance tax contributes to this outmigration, and I believe we can do better as a state.
For over a century, inheritance tax revenue has been an important financial tool for counties. It funds roads, bridges, vehicles, equipment, and day-to-day operations.
But Clements promises that several new potential revenue streams will help keep counties financially stable. “Since last May, I have worked with the Nebraska Association of County Officials (NACO) on a solution acceptable to counties,” Clements revealed. NACO supports removing the inheritance tax as long as replacement revenue is included.
The proposal includes:
– Lowering the inheritance tax rate for people inheriting from parents while raising the tax threshold from $100,000 to $150,000.
– Cutting the tax rate for relatives like nieces and nephews to 3% on assets over $50,000, down from the current 11% tax on inheritances over $40,000. – Reducing the tax rate for unrelated individuals from 15% to 3.5%, with the exemption amount doubled from $25,000 to $50,000. To make up for the estimated $34.8 million drop in inheritance tax revenues, Clements suggested several measures:
– Doubling the marriage license fee from $25 to $50.
– Tripling the motor vehicle inspection fee from $10 to $30. – Raising the distressed warrant fee from $2 to $20.
Inheritance tax cut proposal advances
– Redirecting $5 million from the Securities Act Cash Fund and 25 cents from each document stamp tax filed. – Increasing the nameplate capacity tax on wind turbines from $3,518 to $6,560. – Ending a $9.4 million tax incentive program for businesses and a $7 million sales tax exemption for data centers.
Sen. Mike Jacobson, a Republican from North Platte, had opposed similar efforts in the past. But he supported the new plan, calling it a “much more level source of funding.”
Some lawmakers praised the bill as a good compromise.
But others, like Sen. Jane Raybould of Lincoln, worried it might lead to relying more on property taxes. The bill also faced pushback from Sen.
Rob Dover, a Republican from Norfolk, and Sen. Stan Clouse, a Republican from Kearney. They particularly disliked diverting funds from the Site and Building Development Fund, which boosts community economic development.
Alternative ideas from Sen. Eliot Bostar, a Democrat from Lincoln, were rejected. He wanted to phase out the inheritance tax over ten years or let counties levy a quarter-cent sales tax.
Bostar argued that a sales tax could potentially bring in more revenue for some counties. LB468 will need approval through two more rounds of debate in the remaining days of the 90-day legislative session.
Photo by; Mayron Oliveira on Unsplash