LINCOLN — A bill aimed at reducing Nebraska’s inheritance tax failed to advance in the Legislature Tuesday night, falling just two votes short of breaking a filibuster and moving to the final round of debate.
Sponsored by Sen. Rob Clements of Elmwood, Legislative Bill 468 (LB 468) sought to lower inheritance tax rates and offset lost county revenue with increased fees and reallocated state funds. Despite amending the bill to address concerns, Clements was unable to garner the 33 votes needed to end debate on Day 78 of the 90-day session.
Clements, who chairs the Appropriations Committee, has long advocated for repealing Nebraska’s inheritance tax, noting that neighboring states have already done so. In his amended proposal, tax rates for nieces, nephews, and non-relatives would have been reduced to 7%, with higher exemption thresholds. Children of the deceased would still pay a 1% rate, but only on inheritances above $150,000 — up from the current $100,000.
While the amendment lowered the overall tax reduction to $22.2 million annually—down from the original $34.3 million—it removed provisions that had drawn opposition, including a $4.2 million transfer from the Site and Building Development Fund and $9.4 million in business sales tax credits.
However, critics remained unconvinced. Senators from Lincoln and Omaha, including Sen. Danielle Conrad and Sen. Dunixi Guereca, argued that the inheritance tax plays a vital role in funding county operations and infrastructure without increasing property taxes. Conrad noted Nebraska’s model is already more favorable to close relatives compared to other states.
Concerns also centered on how Clements proposed to make up for lost revenue. His plan included increasing the tax on wind turbines, doubling marriage license fees, tripling motor vehicle inspection fees, and eliminating certain sales tax exemptions—including those for data centers. Opponents, such as Sen. George Dungan, questioned the long-term sustainability of these funding sources and warned they could place more burden on low-income residents.
Despite attracting more support than previous attempts, the bill ultimately stalled. Sens. Rob Dover and Merv Riepe withheld support for cloture, citing concerns over specific tax hikes such as the nameplate capacity tax on wind energy.
Although Clements expressed optimism over the growing opposition to the inheritance tax, he acknowledged that LB 468 is unlikely to return to the floor this session.
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