If you searched "Iowa inheritance tax 2026" because you're settling an estate or expecting an inheritance from an Iowa resident, here's the short version: there is no Iowa inheritance tax in 2026. Iowa spent four years phasing the tax out — cutting rates by 20 percentage points a year starting in 2021 — before eliminating it entirely for deaths occurring on or after January 1, 2025. That repeal is confirmed directly on the Iowa Department of Revenue's website, and it applies to deaths in 2026 and every year going forward (unless a future legislature reinstates it, which has not happened).
This guide walks through exactly how the phase-out worked, what the old rates looked like before repeal, who still needs to file paperwork for a death that occurred before 2025, and how Iowa's repeal fits into the bigger picture of state estate tax and the federal estate tax that still applies nationwide.
Iowa didn't repeal its inheritance tax overnight. Lawmakers passed Senate File 619 in 2021, which reduced inheritance tax rates by 20 percentage points every year for four years before eliminating the tax entirely. The schedule is based on the decedent's date of death, not the date the return is filed or the estate is settled.
| Year of Death | Rate Reduction | Effective Tax Rate |
|---|---|---|
| 2020 and earlier | None | Full statutory rates (up to 15%) |
| 2021 | Reduced by 20% | 80% of statutory rates |
| 2022 | Reduced by 40% | 60% of statutory rates |
| 2023 | Reduced by 60% | 40% of statutory rates |
| 2024 | Reduced by 80% | 20% of statutory rates |
| 2025 and later (including 2026) | Reduced by 100% | 0% — fully repealed |
The Iowa Department of Revenue's own guidance is unambiguous on this point: Iowa inheritance tax “is not applicable for deaths occurring on or after 1/1/25.” Because 2026 falls after that date, every death in 2026 is automatically outside the scope of the tax — there is no rate to calculate and no return to file for inheritance tax purposes.
If the decedent died between 2021 and 2024, the phased-down rate for that specific year still applies, and an Iowa Inheritance Tax Return (Form IA 706) may still need to be filed for estates that were open or are still being administered. Executors handling a late-filed or amended return for a pre-2025 death should use the rate table in effect for the actual year of death, not the current $0 rate. This is a common point of confusion for estates that take years to settle.
Even though the tax no longer applies, understanding the old structure helps explain why the repeal mattered so much to certain families. Iowa's inheritance tax was never a flat tax — the rate depended entirely on the beneficiary's relationship to the deceased.
| Beneficiary Relationship | Historical Treatment |
|---|---|
| Surviving spouse | Always fully exempt, before and after the phase-out began |
| Children, stepchildren, grandchildren, parents (lineal descendants/ascendants) | Exempt — Iowa eliminated inheritance tax for direct lineal relatives even before the broader 2021 phase-out law |
| Siblings and sons-/daughters-in-law | Taxed at rates up to roughly 10% on amounts above an exemption threshold, before the phase-down reductions applied |
| Aunts, uncles, nieces, nephews, cousins, and other more distant relatives | Taxed at rates up to roughly 15% on amounts above a smaller exemption threshold, before phase-down reductions applied |
| Unrelated beneficiaries (friends, unmarried partners) and certain out-of-state charities | Historically taxed at the highest applicable rate tier |
The key takeaway: Iowa's inheritance tax was already structured to spare immediate family — spouses and lineal descendants owed nothing even under the pre-2021 rules. The 2021–2025 phase-out extended that same $0 treatment to siblings, in-laws, and unrelated beneficiaries, who previously carried the tax burden.
These are two separate questions people often conflate with inheritance tax, so it's worth being precise:
Iowa does not, and never has, imposed a separate state-level estate tax (a tax on the estate itself before assets are distributed, as opposed to inheritance tax, which is paid by the person receiving the inheritance). Only a handful of states — Maryland is the only one to combine both estate and inheritance tax — currently levy an estate tax, and Iowa is not one of them.
Repealing the state inheritance tax did not touch the federal estate tax, which applies to residents of every state, including Iowa. For 2026, the federal estate tax exemption is $15,000,000 per individual (effectively $30,000,000 for a married couple using portability), made permanent by the One Big Beautiful Bill Act (OBBBA). Estates below that threshold owe no federal estate tax at all. Only the value above the exemption is taxed, at rates that can reach 40%. In practice, this means the overwhelming majority of Iowa estates — even sizable ones — owe no estate or inheritance tax of any kind at either the state or federal level in 2026.
Iowa's repeal only controls Iowa's own inheritance tax. If an Iowa resident dies owning real estate or other property located in a state that still has its own inheritance or estate tax (for example, Kentucky, Nebraska, New Jersey, Pennsylvania, or Maryland), that other state's rules — not Iowa's — determine whether tax is owed on that specific property. Iowa repeal does not extend protection to assets physically located elsewhere.
CountryTaxCalc.com is reader-supported. When you use our partner links, we may earn a commission at no cost to you. This helps us provide free tax calculators and comparison tools. Learn more about our affiliate partnerships
★ 4.3 Trustpilot · 287,413 reviews
Send money internationally at the real mid-market rate. Free to open. 14.8M customers worldwide. 4.3★ / 287,000+ Trustpilot reviews.
⚠ For currency exchange only — not a bank account replacement.
Send Money Internationally →★ 4.8 Trustpilot · 1,625 reviews
Moving abroad from the US? Greenback's CPAs specialise in FEIE, foreign tax credits and FBAR. Dedicated CPA, flat fee from $565, no surprises. 71,000+ expat returns filed. 4.8★ / 1,625 Trustpilot reviews.
⚠ Not the cheapest option — best for complex situations and expats who want a dedicated CPA.
Get Expert US Expat Tax Help →Interested in reaching this audience? Advertise on CountryTaxCalc →