Effort underway to repeal Iowa's inheritance tax

The Iowa Senator who heads the Ways and Means Committee wants to reduce the tax burden and inequities in the state's tax code by repealing the inheritance tax. Under the tax, beneficiaries have to pay taxes on their inheritance. Where do legislators stand on the repeal?
Posted at 6:20 PM, Jan 27, 2021
and last updated 2021-01-27 19:21:00-05

COUNCIL BLUFFS, Ia. (KMTV) - The Hawkeye State is one of six states that imposes an inheritance tax. Iowa's law imposes an inheritance tax of up to 15 percent but exempts family members like parents, grandparents, children and great-grandchildren. The tax applies to people like siblings, uncles, aunts and nieces or nephews.

"From an agriculture footprint here in the state of Iowa, this is something that definitely impacts the farmers not only in a financial level but a personal level as well too, how to do complicated estate planning for what otherwise should be a complicated thing," Sen. Dan Dawson said.

Dawson is leading the charge to repeal the tax.

"I don't think any state, let alone the state of Iowa, has any business of trying to extract social inequities through an inheritance tax and seize property and/or financial assets when someone passes away. That's a deeply personal thing," Dawson said.

State Rep. Charlie McConkey believes the legislature should be prioritizing relief for bars, restaurants and getting more people vaccinated.

"Once we put that legislation in, we're on a roll to get the economy going again, then we can deal with these other issues," McConkey said.

Still, Dawson stands firm on his position, saying a repeal will better benefit Iowans.

"Lower tax liability and simple tax policies always benefit Iowans because it's less time for lawyers and less time for CPAs," Dawson said.

Dawson wants to make the repeal of the inheritance tax part of a larger relief package to hit the floor later this legislative session.