A now familiar push and pull between state and local government regarding the state inheritance tax is on the minds of the Hitchcock County Board.
Maintaining hundreds of miles of rural roads helps farmers get grain and livestock to market. Last year, Hitchcock County spent $335,000 on a road grader using money collected inheritance tax. In the upcoming year, they’re not sure they’ll be able to make similar purchases.
“It’s getting to the point where we’re trying to keep our levy low and we try to help our people out because we’re in Southwest Nebraska, there’s not a lot of extra outside income. No factories and stuff like that to amount to anything,” said Hitchcock county chair Paul Nichols.
When the state legislature reconvenes on January 3rd, Hitchcock County and many others are paying attention to the issue of inheritance tax. As of right now, the inheritance tax in the state is a tax on all assets and property from a deceased person, although not applicable to spouses. The tax is 1% in excess of $100,000 to immediate family members like parents and children, and increases for other relations. If the legislature eliminates the tax on assets and property inherited, counties say they have limited resources.
“People in town pay house tax and it doesn’t do it,” said Nichols. “If we miss out it’s going to be really hard to balance out the budgets.”
According to Nichols, the inheritance tax brings in hundreds of thousands of dollars to supplement the general budget, and also keep in case of disasters.
“If we have something like that hit us, where would we get the money? What would we do? It’s really really hard to deal with,” said Nichols.
Nebraska is one of five states that have an inheritance tax, down from six as Iowa repealed its recently. The issue of lowering the tax has been common in the state legislature in recent years. According to the Platte Institute, many Nebraskans oppose the tax.
“[The tax] is burdensome, and a barrier for Nebraska families, especially in an ag state,” said Platte Institute CEO Jim Vokal.
In 2022, a bill was passed that lowered some of the inheritance tax rates. Earlier this year, there was a renewed push to do away with the tax. Another concern that some local governments have in tandem with this push is caps on local spending.
“Our costs keep going up. If you got this cap, how are you going to control it? How are we going to make ends meet?” said Nichols.
With Governor Jim Pillen showing his support for doing away with the inheritance tax and capping local spending, Nichols wants PIllen to consider them and the roads the state and his business rely on before he pushes any legislation.
“I’m sure he wouldn’t want poor roads for the trucks to go on, but it costs a lot to maintain the roads and stuff, and we need the tax money,” said Nichols.