HF 888 (LSB 2234HH (2) 89)

HOUSE FILE 888

BY  GERHOLD and THOMPSON

A BILL FOR

An Act reducing the state inheritance tax rates and providing for the future repeal of the state inheritance tax and state qualified use inheritance tax.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 450.10, Code 2021, is amended by adding the following new subsection:
   NEW SUBSECTION.  7.  a.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2021, but before July 1, 2022, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by ten percent, and rounded to the nearest one-hundredth of one percent.
   b.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2022, but before July 1, 2023, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by twenty percent, and rounded to the nearest one-hundredth of one percent.
   c.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2023, but before July 1, 2024, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by thirty percent, and rounded to the nearest one-hundredth of one percent.
   d.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2024, but before July 1, 2025, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by forty percent, and rounded to the nearest one-hundredth of one percent.
   e.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2025, but before July 1, 2026, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by fifty percent, and rounded to the nearest one-hundredth of one percent.
   f.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2026, but before July 1, 2027, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by sixty percent, and rounded to the nearest one-hundredth of one percent.
   g.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2027, but before July 1, 2028, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by seventy percent, and rounded to the nearest one-hundredth of one percent.
   h.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2028, but before July 1, 2029, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by eighty percent, and rounded to the nearest one-hundredth of one percent.
   i.  In lieu of each rate of tax imposed in subsections 1 through 4, for property passing from the estate of a decedent dying on or after July 1, 2029, but before July 1, 2030, there shall be imposed a rate of tax equal to the applicable tax rate in subsections 1 through 4, reduced by ninety percent, and rounded to the nearest one-hundredth of one percent.
    Sec. 2.  NEW SECTION.  450.98  Tax repealed.
   Effective July 1, 2030, this chapter shall not apply to property of estates of decedents dying on or after July 1, 2030. The inheritance tax shall not be imposed under this chapter in the event the decedent dies on or after July 1, 2030, and, to this extent, this chapter is repealed.
    Sec. 3.  NEW SECTION.  450B.8  Tax repealed.
   Effective July 1, 2030, this chapter shall not apply to property of estates of decedents dying on or after July 1, 2030. The qualified use inheritance tax shall not be imposed under this chapter in the event the decedent dies on or after July 1, 2030, and, to this extent, this chapter is repealed.
    Sec. 4.  CODE EDITOR DIRECTIVE.  The Code editor is directed to remove chapters 450 and 450B from the Code and correct appropriate references to chapters 450 and 450B and appropriate references to the inheritance tax and qualified use inheritance tax effective July 1, 2040.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill proportionally reduces over a nine-year fiscal period the rates of tax applicable to the state inheritance tax, beginning for estates of decedents dying on or after July 1, 2021. The bill then repeals the state inheritance tax and the state qualified use inheritance tax effective July 1, 2030, for property of estates of decedents dying on or after July 1, 2030. Inheritance tax will not be imposed on any property in the event of the death of an individual on or after July 1, 2030. The bill directs the Code editor to remove Code chapters 450 (inheritance tax) and 450B (qualified use inheritance tax) from the Code effective July 1, 2040.