Is Iowa inheritance tax still in effect?

Iowa fully repealed its inheritance tax for deaths occurring on or after January 1, 2025. For deaths from 2021 through 2024, a reduced tax still applied: the normal rates were scaled down each year by 20%, reaching zero in 2025.

Which heirs are exempt from Iowa inheritance tax?

Surviving spouses, lineal ascendants such as parents and grandparents, and lineal descendants such as children, grandchildren, and stepchildren are fully exempt and owe no Iowa inheritance tax. Charities and certain organizations are also exempt.

What were the Iowa inheritance tax rates by class?

Exempt heirs paid 0%. Brothers, sisters, and sons- or daughters-in-law (Class B) paid graduated rates from 5% up to 10%. All other beneficiaries, including aunts, uncles, nieces, nephews, and unrelated persons, paid a flat 10% before the year-of-death reduction.

How did the year-of-death phase-out work?

Iowa multiplied the normal rate by 100% for 2021 deaths, 80% for 2022, 60% for 2023, and 40% for 2024, then 0% for 2025 and later. So an heir's tax in 2024 was only 40% of what the same inheritance would have triggered in 2021.

Is there a minimum estate size before Iowa inheritance tax applied?

Yes. Iowa exempted estates with a net value of $25,000 or less from inheritance tax entirely. Above that threshold the class rates applied to the taxable share, subject to the year-of-death phase-out.

Iowa Inheritance Tax Calculator

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Iowa was one of only a handful of states with an inheritance tax, but it phased the tax out and fully repealed it for deaths on or after January 1, 2025. This calculator estimates the tax for earlier years, when the rate depended on how the heir was related to the deceased and on the year of death.

How it works

Iowa’s inheritance tax depended on the beneficiary class and a year-of-death multiplier:

Exempt heirs (spouse, lineal ascendants/descendants): 0%
Class B (siblings, in-laws): graduated 5% to 10%
Class C (all others): flat 10%
Year factor: 2021 = 100%, 2022 = 80%, 2023 = 60%, 2024 = 40%, 2025+ = 0%
Tax = class rate × year factor   (estates ≤ $25,000 net are exempt)

The class rate is applied to the share each heir receives, then scaled by the year-of-death factor. For deaths in 2025 or later the factor is zero, so no Iowa inheritance tax is due.

Example

A sibling inheriting $100,000 from a 2023 death faces Class B graduated rates of about 5% to 10%, then a 60% year factor. If the gross Class B tax were roughly $8,000, the 60% factor reduces it to about $4,800. The same inheritance from a 2025 death is fully exempt.

Notes

This estimate covers Iowa inheritance tax only and excludes the separate federal estate tax, which applies only to very large estates. Iowa’s exact Class B brackets and the treatment of specific heirs can be nuanced, so confirm details at tax.iowa.gov or with an estate attorney.