House File 887 - Introduced HOUSE FILE 887 BY GERHOLD and THOMPSON A BILL FOR An Act relating to exemptions to the state inheritance tax of 1 estates, and including applicability provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2237HH (5) 89 jm/jh
H.F. 887 Section 1. Section 450.1, subsection 1, Code 2021, is 1 amended by adding the following new paragraph: 2 NEW PARAGRAPH . 0b. “Family members” means brothers, 3 sisters, stepbrothers, stepsisters, first or second cousins, 4 first or second stepcousins, nieces, nephews, and their lineal 5 descendants. 6 Sec. 2. Section 450.7, subsection 1, paragraph a, Code 2021, 7 is amended to read as follows: 8 a. The share of the estate passing to the surviving spouse, 9 and parents, grandparents, great-grandparents, and other lineal 10 ascendants, children including legally adopted children and 11 biological children entitled to inherit under the laws of this 12 state, stepchildren, and grandchildren, great-grandchildren, 13 family members, and other lineal descendants is excluded from 14 taxation under this chapter . 15 Sec. 3. Section 450.9, Code 2021, is amended to read as 16 follows: 17 450.9 Individual exemptions. 18 In computing the tax on the net estate, the entire amount 19 of property, interest in property, and income passing to the 20 surviving spouse, lineal ascendants, lineal descendants, and 21 stepchildren and their lineal descendants , and family members 22 are exempt from tax. “Lineal descendants” includes descendants 23 by adoption. 24 Sec. 4. Section 450.10, subsection 1, unnumbered paragraph 25 1, Code 2021, is amended to read as follows: 26 When the property or any interest in property, or income from 27 property, taxable under the provisions of this chapter , passes 28 to the brother or sister, son-in-law , or daughter-in-law, the 29 rate of tax imposed on the individual share so passing shall 30 be as follows: 31 Sec. 5. Section 450.10, subsection 6, Code 2021, is amended 32 to read as follows: 33 6. Property, interest in property, or income passing 34 to the surviving spouse, and parents, grandparents, 35 -1- LSB 2237HH (5) 89 jm/jh 1/ 2
H.F. 887 great-grandparents, and other lineal ascendants, children 1 including legally adopted children and biological children 2 entitled to inherit under the laws of this state, stepchildren, 3 and grandchildren, great-grandchildren, family members, and 4 other lineal descendants, is not taxable under this section . 5 Sec. 6. APPLICABILITY. This Act applies to estates of 6 decedents dying on or after July 1, 2021. 7 EXPLANATION 8 The inclusion of this explanation does not constitute agreement with 9 the explanation’s substance by the members of the general assembly. 10 This bill expands the state inheritance tax exemption by 11 including estates passing to certain family members. The bill 12 defines “family members”. Currently, estates passing to lineal 13 ascendants and lineal descendants are exempt from the state 14 inheritance tax. 15 The bill applies to estates of decedents dying on or after 16 July 1, 2021. 17 -2- LSB 2237HH (5) 89 jm/jh 2/ 2