House File 886 - IntroducedA Bill ForAn Act 1relating to the state inheritance tax by modifying
2gift amounts excludable in an estate and modifying the
3exemption amount of estates of a certain size, and including
4applicability provisions.
5BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1   Section 1.  Section 450.3, subsection 2, Code 2021, is
2amended to read as follows:
   32.  By deed, grant, sale, gift, or transfer made within
4three years of the death of the grantor or donor, which is
5not a bona fide sale for an adequate and full consideration
6in money or money’s worth and which is in excess of the
7greater of twenty-five thousand dollars and
the annual gift
8tax exclusion allowable for each donee under section 2503,
9subsections (b) and (e), of the Internal Revenue Code. If
10both spouses consent, a gift made by one spouse to a person
11who is not the other spouse is considered, for the purposes
12of this subsection, as made one half by each spouse under the
13same terms and conditions provided for in section 2513 of the
14Internal Revenue Code. The net market value of a transfer
15described in this subsection shall be the net market value
16determined as of the date of the transfer.
17   Sec. 2.  Section 450.4, subsection 1, Code 2021, is amended
18to read as follows:
   191.  When the entire estate of the decedent does not exceed
20the sum of twenty-five one hundred thousand dollars after
21deducting the liabilities, as defined in this chapter.
22   Sec. 3.  Section 450.44, Code 2021, is amended to read as
23follows:
   24450.44  Remainders — valuation.
   25When a person whose estate over and above the amount of that
26person’s liabilities, as defined in this chapter, exceeds the
27sum of twenty-five one hundred thousand dollars, bequeaths,
28devises, or otherwise transfers real property to or for the
29use of persons exempt from the tax imposed by this chapter,
30during life or for a term of years and the remainder to persons
31not thus exempt, this property, upon the determination of the
32estate for life or years, shall be valued at its then actual
33market value from which shall be deducted the value of any
34improvements on it made by the person who owns the remainder
35interest during the time of the prior estate, to be determined
-1-1as provided in section 450.37, subsection 1, paragraph “a”, and
2the tax on the remainder shall be paid by the person who owns
3the remainder interest as provided in section 450.46.
4   Sec. 4.  APPLICABILITY.  This Act applies to the estates of
5decedents dying on or after July 1, 2021.
6EXPLANATION
7The inclusion of this explanation does not constitute agreement with
8the explanation’s substance by the members of the general assembly.
   9This bill relates to the state inheritance tax by modifying
10gift amounts includable in an estate and modifying the
11exemption amount of estates of a certain size, and includes
12applicability provisions.
   13Currently, annual gifts made within three years of death
14of the decedent that are in excess of the federal gift tax
15exclusion, presently set at $15,000, are included in an estate
16for purposes of calculating the state inheritance tax. The
17federal gift tax exclusion increases over time with inflation.
18The bill specifies that a gift made within three years of
19the death of a decedent shall not be included in the estate
20unless the gift exceeds the federal gift tax exclusion amount
21(currently $15,000) or $25,000, whichever is greater.
   22The bill also increases from $25,000 to $100,000 the value at
23which estates are exempt from the state inheritance tax.
   24The bill applies to estates of decedents dying on or after
25July 1, 2021.
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