HF 886 (LSB 2235HH (4) 89)

HOUSE FILE 886

BY  GERHOLD, THOMPSON, and BLOOMINGDALE

A BILL FOR

An Act relating to the state inheritance tax by modifying gift amounts excludable in an estate and modifying the exemption amount of estates of a certain size, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 450.3, subsection 2, Code 2021, is amended to read as follows:
   2.  By deed, grant, sale, gift, or transfer made within three years of the death of the grantor or donor, which is not a bona fide sale for an adequate and full consideration in money or money’s worth and which is in excess of the greater of twenty-five thousand dollars and the annual gift tax exclusion allowable for each donee under section 2503, subsections (b) and (e), of the Internal Revenue Code. If both spouses consent, a gift made by one spouse to a person who is not the other spouse is considered, for the purposes of this subsection, as made one half by each spouse under the same terms and conditions provided for in section 2513 of the Internal Revenue Code. The net market value of a transfer described in this subsection shall be the net market value determined as of the date of the transfer.
    Sec. 2.  Section 450.4, subsection 1, Code 2021, is amended to read as follows:
   1.  When the entire estate of the decedent does not exceed the sum of twenty-five one hundred thousand dollars after deducting the liabilities, as defined in this chapter.
    Sec. 3.  Section 450.44, Code 2021, is amended to read as follows:
   450.44  Remainders —— valuation.
   When a person whose estate over and above the amount of that person’s liabilities, as defined in this chapter, exceeds the sum of twenty-five one hundred thousand dollars, bequeaths, devises, or otherwise transfers real property to or for the use of persons exempt from the tax imposed by this chapter, during life or for a term of years and the remainder to persons not thus exempt, this property, upon the determination of the estate for life or years, shall be valued at its then actual market value from which shall be deducted the value of any improvements on it made by the person who owns the remainder interest during the time of the prior estate, to be determined as provided in section 450.37, subsection 1, paragraph “a”, and the tax on the remainder shall be paid by the person who owns the remainder interest as provided in section 450.46.
    Sec. 4.  APPLICABILITY.  This Act applies to the estates of decedents dying on or after July 1, 2021.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill relates to the state inheritance tax by modifying gift amounts includable in an estate and modifying the exemption amount of estates of a certain size, and includes applicability provisions.
   Currently, annual gifts made within three years of death of the decedent that are in excess of the federal gift tax exclusion, presently set at $15,000, are included in an estate for purposes of calculating the state inheritance tax. The federal gift tax exclusion increases over time with inflation. The bill specifies that a gift made within three years of the death of a decedent shall not be included in the estate unless the gift exceeds the federal gift tax exclusion amount (currently $15,000) or $25,000, whichever is greater.
   The bill also increases from $25,000 to $100,000 the value at which estates are exempt from the state inheritance tax.
   The bill applies to estates of decedents dying on or after July 1, 2021.