HF 887 (LSB 2237HH (5) 89)

HOUSE FILE 887

BY  GERHOLD and THOMPSON

A BILL FOR

An Act relating to exemptions to the state inheritance tax of estates, and including applicability provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 450.1, subsection 1, Code 2021, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0b.  “Family members” means brothers, sisters, stepbrothers, stepsisters, first or second cousins, first or second stepcousins, nieces, nephews, and their lineal descendants.
    Sec. 2.  Section 450.7, subsection 1, paragraph a, Code 2021, is amended to read as follows:
   a.  The share of the estate passing to the surviving spouse, and parents, grandparents, great-grandparents, and other lineal ascendants, children including legally adopted children and biological children entitled to inherit under the laws of this state, stepchildren, and grandchildren, great-grandchildren, family members, and other lineal descendants is excluded from taxation under this chapter.
    Sec. 3.  Section 450.9, Code 2021, is amended to read as follows:
   450.9  Individual exemptions.
   In computing the tax on the net estate, 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, and family members are exempt from tax. “Lineal descendants” includes descendants by adoption.
    Sec. 4.  Section 450.10, subsection 1, unnumbered paragraph 1, Code 2021, is amended to read as follows:
   When the property or any interest in property, or income from property, taxable under the provisions of this chapter, passes to the brother or sister, son-in-law, or daughter-in-law, the rate of tax imposed on the individual share so passing shall be as follows:
    Sec. 5.  Section 450.10, subsection 6, Code 2021, is amended to read as follows:
   6.  Property, interest in property, or income passing to the surviving spouse, and parents, grandparents, great-grandparents, and other lineal ascendants, children including legally adopted children and biological children entitled to inherit under the laws of this state, stepchildren, and grandchildren, great-grandchildren, family members, and other lineal descendants, is not taxable under this section.
    Sec. 6.  APPLICABILITY.  This Act applies to 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 expands the state inheritance tax exemption by including estates passing to certain family members. The bill defines “family members”. Currently, estates passing to lineal ascendants and lineal descendants are exempt from the state inheritance tax.
   The bill applies to estates of decedents dying on or after July 1, 2021.