Iowa inheritance tax history

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Inheritance Tax Rates and Exemptions

• Iowa Code 1975 —
  • Exemptions: Spouse $80,000; child $15,000; parent $10,000; other lineal descendent $5,000
  • Rate:
    • Spouse, parent, lineal descendent: 1% to $5,000; 2% to $12,000; 3% to $25,000; 4% to $50,000; 5% to $75,000; 6% to $100,000; 7% to $150,000; 8% thereafter
    • Sibling, in-law, step-children: 5% to $12,000; 6% to $25,000; 7% to $75,000; 8% to $100,000; 9% to $150,000; 10% thereafter
    • Others: 10% to $50,000; $12% to $100,000; 15% thereafter

Acts Relating To Inheritance Tax Liens

• Code 1962 — A lien existed on all property unless the decedent died on or before July 4, 1951.

450.7 Lien of tax. The tax shall be and remain a legal charge against and a lien upon such estate, and any and all the property thereof from the death of the decedent owner until paid subject to the limitation that inheritance taxes owing with respect to any passing of property which has been reported for taxation in the estates of deceased persons who died on or before July 4, 1951 under inheritance tax laws of this state shall no longer be a lien against such property except to the extent such taxes are attributable to remainder or deferred interest therein which did not finally vest in possession or before such date. The filing in the office of the clerk of the receipt in full, or certificate of nonliability, of the state tax commission or an order of court specifically find that the estate is exempt from tax shall release said lien as to all property reported in the estate.

• 60 GA ch. 275 § 1 (1963) — Minor technical change to definition of what is reported.
• 64 GA ch. 218 § 1 (1971) — Major re-write (roughly to present its form); 20-year limitation on lien when estate administered outside Iowa; 10-year limitation on lien when estate administered in Iowa.
• 70 GA ch. 177 § 3 (1983) — Minor change. Eliminated reporting requirement for changes since preliminary inventory in nature of asset.
• 70 GA ch, 1240 § 3 (1984) — Subordinating Iowa Estate Tax Lien if Inheritance Tax Lien released and subsequent conveyance or encumbrance.
• 73 GA ch. 1232 § 20 (1990) — Eliminated lien with respect to share passing to surviving spouse.
• 76 GA ch. 63 § 1 (1995) — Repealed 20-year limitation on out-of-state administered estates; all estates sub ect to 10-year limitation.

450.7 Lien of tax.

1. Except for the share of the estate passing to the surviving spouse, the tax is a charge against and a lien upon the estate subject to tax under this chapter, and all property of the estate or owned by the decedent from the death of the decedent until paid, subject to the following limitation:

Inheritance taxes owing with respect to a passing of property of a deceased person are no longer a lien against the property ten years from the date of death of the decedent owner, except to the extent taxes are attributable to remainder or deferred interests and are deferred in accordance with the provisions of this chapter.

2. Notice of the lien is not required to be recorded. The rights of the state under the lien have priority over all subsequent mortgages, purchases, or judgment creditors; and a conveyance after the decedent’s death of the property subject to a lien does not discharge the property except as otherwise provided in this chapter. However, if additional tax is determined to be owing under this chapter or chapter 451 after the lien has been released under paragraph “a” or “b”, the lien does not have priority over subsequent mortgages, purchases, or judgment creditors unless notice of the lien is recorded in the office of the recorder of the county where the estate is probated, or where the property is located if the estate has not been administered. The department of revenue and finance may release the lien by filing in the office of the clerk of the court in the county where the property is located, the decedent owner died, or the estate is pending or was administered, one of the following:

a. A receipt in full payment of the tax.

b. A certificate of nonliability for the tax as to all property reported in the estate.

c. A release or waiver of the lien as to all or any part of the property reported in the estate, which shall release the lien as to the property designated in the release or waiver.

3. The sale, exchange, mortgage, or pledge of property by the personal representative pursuant to a testamentary direction or power, pursuant to section 633.387, or under order of court, divests the property from the lien of the tax. The proceeds from that sale, exchange, mortgage, or pledge shall be held by the personal representative subject to the same priorities for the payment of the tax as existed with respect to the property before the transaction, and the personal representative is personally liable for payment of the tax to the extent of the proceeds.

Section 1. Section 450.7, subsection 1, Code 1995, is amended to read as follows:

1. Except for the share of the estate passing to the surviving spouse, the tax is a charge against and a lien upon the estate subject to tax under this chapter, and all property of the estate or oed by the decedent from the death of the decedent until paid, subject to the following limitations limitation:

a. Inheritance taxes owing with respect to a passing of property of a deceased person whose estate has not been administrered in this state are no longer a lien against the property twenty years from the date of death of the decedent owner, except to the extent taxes are attributable to remainder or deferred interests which have not been finally vested in possession for at least ten years.

b. Inheritance taxes owing with respect to a passing of property of a deceased person whose estate has been administered in this state are no longer a lien against the property ten years from the date of death of the decedent owner, except to the extent taxes are attributable to remainder or deferred interests and are deferred in accordance with the provisions of this chapter.

77 G.A. ch. 1 (1997) (S.F. 35) — Removed the lien from lineal ascendents and descendents:

Section 1. Section 450.7, subsection 1, unnumbered paragraph 1, Code 1997, is amended to read as follows:

Except for 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, and other lineal descendants, the tax is a charge against and a lien upon the estate subject to tax under this chapter, and all property of the estate or owned by the decedent from the death of the decedent until paid, subject to the following limitation:...

Sec. 8. This Act applies to estates of decedents dying on or after July 1, 1997.