Iowa Inheritance Tax Repealed for Deaths From January 1, 2025: Last Rate Cut 80% in 2024
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Quick Answer
Iowa no longer has an inheritance tax for anyone who died on or after January 1, 2025: Senate File 619 (2021) cut every rate by a further 20% of the original rate each year for deaths in 2021, 2022, 2023 and 2024 (an 80% cut in the last year) and added section 450.98, under which the chapter “shall not apply to property of estates of decedents dying on or after January 1, 2025” (as of November 8, 2026). Before that, a spouse, parent, child, grandchild and other lineal relatives never paid; a brother or sister paid 5% to 10%, and a niece, nephew, cousin or friend paid 10% to 15%. A niece who received $400,000 owed $56,000 for a death before 2021, $22,400 for a 2023 death, $11,200 for a 2024 death and $0 for a 2025 death (our arithmetic). The tax is not forgotten for older deaths: the IA 706 was due nine months after death, the last original due date was September 30, 2025, and the Department of Revenue says supplemental and amended returns are still required. Iowa has had no estate tax since 2005.
Key Takeaways
- The statute is section 450.10(7) of the Iowa Code, added by section 11 of Senate File 619 (2021 Acts, ch. 177): rates in subsections 1 through 4 are “reduced by twenty percent” for deaths in 2021, forty for 2022, sixty for 2023 and eighty for 2024, each rounded to the nearest one-hundredth of one percent. Section 12 of the same act adds 450.98, the repeal for deaths on or after January 1, 2025, and section 16 makes the cuts retroactive to deaths on or after January 1, 2021.
- Never taxed in any year: the surviving spouse, parents, grandparents and other lineal ascendants, children (adopted children included), stepchildren, grandchildren and other lineal descendants (Iowa Code 450.9 and 450.10(6)). Taxed until the repeal: siblings, sons-in-law and daughters-in-law at 5% to 10% (Class B), and every other individual, nieces, nephews, aunts, uncles, cousins and friends, at 10% to 15% (Class C), before the yearly cut.
- Effective rate on a $400,000 share (our arithmetic): a niece paid 14.0% for a death before 2021, 11.2% in 2021, 8.4% in 2022, 5.6% in 2023, 2.8% in 2024 and 0% from 2025; a sibling paid 9.09%, 7.28%, 5.46%, 3.64%, 1.82% and 0%. The 2024 figures match the Department of Revenue's own 2024 rate sheet (60-013), for example $2,200 plus 3% over $100,000 for a niece.
- Deaths before 2025 still carry rules. The inheritance tax return (IA 706) and the tax were due “on or before the last day of the ninth month after the death”; a death on December 31, 2024 had a last original due date of September 30, 2025 (our arithmetic). Late-return and late-payment penalties are 5% each, and 75% for willful failure to file (IA 706 instructions 60-066a, July 11, 2025).
- No return was needed when the estate had no federal estate tax filing requirement and everything passed to a spouse, lineal ascendants, lineal descendants or stepchildren (instructions 60-066a; Iowa Code 450.53(1)(b)). The Department adds that it issues no inheritance tax clearance to anyone not required to file.
- An Iowa-property heir today faces no Iowa inheritance tax if the owner died in 2025 or later, but a later sale is taxed under Iowa income tax at a flat 3.8% of taxable income (Iowa Code 2026, section 422.5(1)(a)). Federal basis resets to date-of-death value (26 U.S.C. 1014(a)(1)): a $30,000 gain on a $400,000 stepped-up rental costs $1,140 of Iowa income tax, against $10,640 on the same sale with a $150,000 basis (our arithmetic, before any deduction).
CSV · 199 rows
Iowa inheritance tax: the repeal schedule by year of death 2021-2025, rates by class, filing rules for deaths before 2025, and worked examples
199 rows: the statute's yearly reductions and the repeal, base rates for each class, rates and tax on four share sizes for each year of death, the Department of Revenue's 2024 and pre-2021 sheets, exemptions, taxable property, filing, penalty and refund rules, the 3.8% income tax rate and the worked examples (our arithmetic).
What Senate File 619 did, in the order the statute does it
Senate File 619 (89th General Assembly, 2021 Acts, ch. 177) is a long tax act. Division V is the inheritance tax, and it has four moving parts. We read the enrolled bill and the Iowa Code as the Legislature publishes it for 2026.
| Provision | What it says | Where |
|---|---|---|
| Rate cut, deaths in 2021 | Each rate in subsections 1 through 4 “reduced by twenty percent, and rounded to the nearest one-hundredth of one percent” | Iowa Code 450.10(7)(a) |
| Rate cut, deaths in 2022 | Reduced by forty percent | 450.10(7)(b) |
| Rate cut, deaths in 2023 | Reduced by sixty percent | 450.10(7)(c) |
| Rate cut, deaths in 2024 | Reduced by eighty percent | 450.10(7)(d) |
| Repeal | “Effective January 1, 2025, this chapter shall not apply to property of estates of decedents dying on or after January 1, 2025.” | New section 450.98 (SF 619, section 12) |
| Qualified use (farm) inheritance tax | The same repeal for chapter 450B, new section 450B.8 | SF 619, section 13 |
| Retroactivity | The division “applies retroactively to the estates of decedents dying on or after January 1, 2021” | SF 619, section 16 |
Two readings, both ours. First, the cut is a fraction of the old rate, not a drop of 20 points: 20% off 10% is 8%, which is why the top Class C rate went 15%, 12%, 9%, 6%, 3% and then zero. Second, section 16 means an estate that paid the full rate on a 2021 death before the bill was signed was entitled to the lower rate, and the refund clock in section 450.94(3) (three years after the tax came due, or one year after payment, whichever is later) has, in our reading, run for the earliest of those estates.
The cuts are also the rates that governed every pre-2025 death still being settled, which is why the schedule below matters to an estate that has not closed. Our list of states with an estate or inheritance tax counts Iowa as repealed for current deaths and agrees with this page.
The schedule by year of death, class by class
The Department of Revenue labels the rate tables by letter. “Tax Rate B” is a brother, sister (half-blood included), son-in-law or daughter-in-law. “Tax Rate C” is an uncle, aunt, niece, nephew, foster child, cousin, brother-in-law, sister-in-law “and all other individual persons.” The statute's base rates (Iowa Code 450.10(1) and (2)) are below; the yearly rates are our arithmetic from the percentages in 450.10(7), and the 2024 column is identical to the Department's 2024 sheet.
| Year of death | Cut | Class B (sibling) rates, six brackets | Class C (niece, nephew, cousin, friend) rates, three brackets | Firm for profit / out-of-state charity |
|---|---|---|---|---|
| Before 2021 | 0% | 5%, 6%, 7%, 8%, 9%, 10% | 10%, 12%, 15% | 15% / 10% |
| 2021 | 20% | 4%, 4.8%, 5.6%, 6.4%, 7.2%, 8% | 8%, 9.6%, 12% | 12% / 8% |
| 2022 | 40% | 3%, 3.6%, 4.2%, 4.8%, 5.4%, 6% | 6%, 7.2%, 9% | 9% / 6% |
| 2023 | 60% | 2%, 2.4%, 2.8%, 3.2%, 3.6%, 4% | 4%, 4.8%, 6% | 6% / 4% |
| 2024 | 80% | 1%, 1.2%, 1.4%, 1.6%, 1.8%, 2% | 2%, 2.4%, 3% | 3% / 2% |
| 2025 and later | Repealed | None | None | None |
The brackets did not move: Class B was taxed on the first $12,500, then to $25,000, $75,000, $100,000, $150,000 and above; Class C on the first $50,000, then to $100,000 and above (450.10(1) and (2)). The rates apply to “the individual share so passing”, so the tax is worked out heir by heir, not on the whole estate.
| Year of death | Class B on $100,000 | Class B on $400,000 | Class B effective on $400,000 | Class C on $100,000 | Class C on $400,000 | Class C effective on $400,000 |
|---|---|---|---|---|---|---|
| Before 2021 | $6,875 | $36,375 | 9.09% | $11,000 | $56,000 | 14.00% |
| 2021 | $5,500 | $29,100 | 7.28% | $8,800 | $44,800 | 11.20% |
| 2022 | $4,125 | $21,825 | 5.46% | $6,600 | $33,600 | 8.40% |
| 2023 | $2,750 | $14,550 | 3.64% | $4,400 | $22,400 | 5.60% |
| 2024 | $1,375 | $7,275 | 1.82% | $2,200 | $11,200 | 2.80% |
| 2025 and later | $0 | $0 | 0% | $0 | $0 | 0% |
All figures in the table above are our arithmetic from the statute's brackets and the cut for each year. Two cross-checks against the Department's own sheets: the pre-2021 sheet (60-061) prints Class B as “11,375 + 10%” over $150,000 and Class C as “11,000 + 15%” over $100,000, and the 2024 sheet (60-013) prints “2,275 + 2.00%” and “2,200 + 3.00%”. Both reproduce to the dollar.
Who was exempt, and which assets were exempt whoever got them
The exemption is by relationship, not by size. Section 450.9 exempts “the entire amount of property, interest in property, and income passing to the surviving spouse, lineal ascendants, lineal descendants, and stepchildren and their lineal descendants,” adoptees included. Section 450.4 adds exemptions that apply to any heir.
| Item | Rule | Iowa Code |
|---|---|---|
| Small estate | No tax when the entire estate, after liabilities, does not exceed $25,000 | 450.4(1) |
| Charitable, educational, religious gifts | Not collected when the property passes for a purpose defined in sections 170(c) and 2055 of the Internal Revenue Code | 450.4(2) |
| Retirement accounts | The part of an employer plan or IRA “that will be subject to federal income tax when paid to the beneficiary” is exempt “regardless of the identity of the beneficiary” | 450.4(5) |
| 529 plans and Iowa ABLE accounts | Exempt to the extent excluded from the gross estate for federal estate tax purposes (529); ABLE interests exempt | 450.4(8) and (9) |
| Joint tenancy, gifts and trusts | Counted in the estate for inheritance tax even though they skip probate; gifts above the annual exclusion made within three years of death are included | 450.3; Department page |
| Where the property is | Iowa real estate and tangible property are taxable whatever the decedent's residence; intangibles only if the decedent was domiciled in Iowa | 450.2 |
The retirement-account row is the one that surprised heirs most. A niece who inherited a $300,000 IRA owed no Iowa inheritance tax on the part that would be taxed to her as income, in every year, repeal or not. The federal side still applies; see our guide to the inherited IRA 10-year rule.
What still applies to a death before 2025
The Department's instructions for the IA 706 (60-066a, revised July 11, 2025) open with the repeal and then keep the old rules for earlier deaths. Here is what they and the Code say today.
| Question | Answer for a death before January 1, 2025 | Source |
|---|---|---|
| Who pays? | The beneficiary pays; the personal representative sees that the tax is collected and paid | Department page |
| When was it due? | The return and the tax by the last day of the ninth month after death, moved to the next business day if it fell on a weekend or holiday | Iowa Code 450.6 and 450.94(2); instructions |
| What was the latest original due date? | September 30, 2025, for a death on December 31, 2024 (our arithmetic) | Our arithmetic from 450.6 |
| Can the deadline be extended? | Yes. The director may extend payment up to ten years from the last day of the month of death, with interest from the end of the ninth month; the Department's extension form is 60-027a | 450.6; Department page |
| Penalty if late? | 5% of the unpaid tax for filing late and 5% for paying late (each if under 90% of the tax was paid by the due date), 75% for willful failure to file or intent to evade; interest runs on the unpaid tax | Instructions 60-066a |
| Is a return needed if nothing is owed? | Not if the estate has no federal estate tax filing requirement and all assets pass to a spouse, lineal ascendants, lineal descendants or stepchildren (deaths July 1, 2004 to December 31, 2024). The Department's rate sheet says that where the net estate is under $25,000 the tax is zero, but “a return may still be required to be filed” | 450.53(1)(b); instructions; sheet 60-013 |
| What about joint tenancy and real estate? | No return and an affidavit filed in the county instead, if everything is joint with a spouse or exempt relatives or passes by beneficiary designation or trust solely to exempt relatives and there is no federal estate tax filing | 450.22(2)-(4) |
| What if an asset turns up later? | “If assets are discovered after completing and filing the original return, an amended return must be filed and any additional tax paid” | Department page |
| Can the Department still audit? | Yes. It may audit; an assessment can be protested within 60 days | Department page |
| Is there a lien on the property? | Yes, until paid, but the lien ends ten years after the date of death except for deferred remainder interests | 450.7(1)(b) |
| Can I get a refund? | A claim must be filed within three years after the payment came due or one year after the payment, whichever is later | 450.94(3) |
The practical reading, ours: for a 2024 death, the nine-month deadline has passed and the lien lasts ten years from the date of death (2034 at the latest). If the estate was not settled at all (for example, a rental inherited by a niece that no one reported), the estate or the heir still owes the tax at the 2024 rate, 2.8% on $400,000, plus the 5% penalties and interest. The 2024 cut is what makes that bill small. Anyone in that position should talk to the estate's attorney before contacting the Department; this page does not say what the penalty waiver standard is, only that the instructions say penalties “can only be waived under limited circumstances, as described in Iowa Code section 421.27.”
The IA 706 itself is still on the Department's site (current form version 60-008a, July 7, 2025). Its inheritance tax page says in its first line: “Iowa inheritance tax is not applicable for deaths occurring on or after 1/1/25.”
Worked examples (our arithmetic)
Four heirs, four years. All are Class B or Class C shares computed with the yearly rates above.
| Case | Tax | How |
|---|---|---|
| Niece receives $400,000, death before 2021 | $56,000 | $5,000 on the first $50,000 + $6,000 on the next $50,000 + 15% of $300,000 ($45,000) |
| Niece, same $400,000, death in 2023 | $22,400 | 4% of $50,000 ($2,000) + 4.8% of $50,000 ($2,400) + 6% of $300,000 ($18,000) |
| Niece, same $400,000, death in 2024 | $11,200 | 2% of $50,000 ($1,000) + 2.4% of $50,000 ($1,200) + 3% of $300,000 ($9,000) |
| Niece, same $400,000, death in 2025 | $0 | Section 450.98: chapter does not apply |
| Brother receives $400,000, death in 2023 | $14,550 | Class B at a 60% cut |
| Brother, same share, death in 2024 | $7,275 | Class B at an 80% cut; the Department's sheet gives $2,275 + 2% of $250,000 |
| Two nieces share a $600,000 rental, 2024 death | $16,400 in all | Each share $300,000: $1,000 + $1,200 + 3% x $200,000 = $8,200 each, $16,400 in all |
| Surviving spouse or child inherits $400,000, any year | $0 | Sections 450.9 and 450.10(6) |
The two-nieces row shows why the split matters: the tax is on each share, so the second bracket applies twice. If one niece had taken the whole $600,000, the 2024 tax would have been $2,200 + 3% x $500,000 = $17,200, a difference of $800 (our arithmetic).
What an heir of Iowa property faces today
Repeal removes the death tax, not the other costs. Three layers remain.
| Layer | Rule | Source |
|---|---|---|
| Iowa inheritance tax | None for deaths on or after January 1, 2025; none on the retirement-account portion for any earlier year | Iowa Code 450.98; 450.4(5) |
| Iowa estate tax | Not applicable for deaths on or after 1/1/05 | Department page |
| Federal estate tax | Filed on Form 706 only for large estates; see our [federal exemption page](/articles/estate-tax-exemption-2026) | Our federal exemption page |
| Basis for a later sale | The heir's basis is the fair market value at the date of the decedent's death (26 U.S.C. 1014(a)(1)) | IRC 1014 |
| Iowa income tax on a sale | A flat 3.8% on “the entire taxable income” of residents and nonresidents, for tax years beginning in 2025 and later | Iowa Code 2026, 422.5(1)(a) |
| Income after death | Income the estate or a trust earns after death goes on a fiduciary return (IA 1041); the final IA 1040 covers income up to the date of death | Department page |
Example (our arithmetic): a niece inherits an Iowa rental valued at $400,000 on the date of death in 2025 and sells it for $430,000. Her basis is $400,000, the gain is $30,000 and the Iowa income tax at 3.8% is $1,140, before any Iowa deduction we have not analyzed. Had the rental passed with a carryover basis of $150,000 the gain would be $280,000 and the Iowa tax $10,640. That gap is the step-up; our page on step-up in basis for inherited real estate covers the federal rules, and the overview of what heirs owe by asset shows the rest. Kentucky, Nebraska and Pennsylvania still collect an inheritance tax; see our pages on Kentucky and Nebraska. Our Kentucky page shows that Kentucky taxes a nonresident's Kentucky real estate, so an Iowa resident with a rental there can owe that state's tax even though Iowa now charges none.
What a reader can do with this
- Find the date of death first. From January 1, 2025 there is no Iowa inheritance tax. Before that date the heir's class and the year set the rate in the table above.
- For a pre-2025 death, check whether the estate closed. Ask the estate's attorney whether an IA 706 was filed or a return was not required, and whether the Department issued an inheritance tax clearance. The Department issues none where no return was required.
- Do not skip the supplemental return. The instructions say supplemental and amended returns are still required, so an asset found late in a pre-2025 estate is still reported.
- Count the retirement accounts separately. They were exempt from Iowa inheritance tax for every heir, so the taxable base for a niece was the rest of the estate.
- Plan for the sale, not the death. For a 2025 or later death, the Iowa cost is income tax at 3.8% on the gain over the stepped-up basis, so a date-of-death appraisal is worth getting.
- Check the other state. An Iowa resident who left property in another state with its own inheritance tax may owe that state's tax; check that state's rules. See the probate guide for how title passes.
This is analysis of public documents, not investment, legal or tax advice.
FAQ
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An email when the iowa inheritance tax numbers change
When a rate, rule or filing behind this page changes: what changed, the one number that matters, and the source to check it yourself.
Sources, read and saved on November 8, 2026: Iowa Code 2026 sections 450.1, 450.2, 450.3, 450.4, 450.5, 450.6, 450.7, 450.8, 450.9, 450.10, 450.12, 450.22, 450.37, 450.44, 450.53, 450.63, 450.64, 450.94 and 422.5 (legis.iowa.gov, copies dated December 12, 2025); enrolled Senate File 619, 89th General Assembly (2021 Acts, ch. 177); Iowa Department of Revenue pages and forms: Introduction to Iowa Inheritance Tax, Inheritance Tax Rates Pre-2021 (60-061, 01/03/2022), Inheritance Tax Rates 2024 (60-013, 04/15/2024), IA 706 Iowa Inheritance Tax Return Instructions (60-066a, 07/11/2025) and the IA 706 form (60-008a, 07/07/2025); 26 U.S.C. 1014 (law.cornell.edu). We did not read the rate sheets for 2021, 2022 and 2023, which the Department lists but whose files we could not open; those years are our arithmetic from the percentages in section 450.10(7), and the 2024 sheet matches the same method. Ladders, examples and the due date for a December 31, 2024 death are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.
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