Iowa Inheritance Tax
The inheritance tax of Iowa is imposed on the right of the beneficiary to inherit property or money. In this regard it is different from the Federal Estate Tax, which is charged on the whole property of the deceased person. The Iowa laws specify that in the absence of a will, the property will be distributed accordingly.
The inheritance tax return of Iowa must show the total money value of the estate and the types of property held in the estate. The debts, liabilities and deductions must also be included. All the property of the deceased as a whole is known as the gross estate.
The profit-sharing plans, pensions, and insurance policies may also be included in inheritance tax returns.
Iowa calculates a property's value in the following way:
- The conventional method is to take into account the market value of the property as it stands on the day of death of the person
- The market value of the property of the deceased person six months after his death can also be taken into account
The inheritance tax exemptions of Iowa are as follows:
- The surviving spouse, parents, children, grandparents, and grandchildren are not required to pay inheritance tax after July 1997 on inheritance
- Annual gifts of amounts lesser than $12,000 are not taxed
- No taxes are collected on estate property of less than $25,000 value
- Proceeds of insurance to a beneficiary are also not taxed
- Retirement annuities and employee pension annuities are free of tax
Iowa's inheritance tax is collected by the Iowa Department of Revenue.