How to Fill Out the Iowa Inheritance Tax Return (IA 706)

To fill out the Iowa Inheritance Tax Return (IA 706), you list every asset the decedent owned at date-of-death value on the appropriate schedule, subtract allowed debts and administration expenses, allocate each beneficiary’s net share, and apply the tax rate that matches that beneficiary’s relationship to the decedent. The return is filed with the Iowa Department of Revenue within nine months of death. One threshold question comes first: Iowa repealed its inheritance tax for anyone who died on or after January 1, 2025, so the form only applies to estates of decedents who died before that date.¹

Confirm the Return Is Actually Required

For a death before January 1, 2025, filing is required when the gross estate exceeds $25,000 after debts and liabilities, unless every dollar passes to exempt beneficiaries (surviving spouse, lineal ascendants, lineal descendants, and stepchildren and their lineal descendants). A single non-exempt heir receiving more than the allowed exemption is enough to trigger the requirement.²

There is one important exception that catches executors off guard. If the gross estate includes Iowa real estate, the return must be filed even when no tax is owed. Without a completed IA 706, the Department will not issue the “no tax due” certificate that clears the inheritance tax lien, and no title company will insure a transfer.²

If the decedent died on or after January 1, 2025, stop. No IA 706 is required, no tax is owed, no clearance is needed, and standard probate handles the real estate transfer.¹

Gather Your Inputs

Before you open the form, pull the records together. Every figure on the return has to be defensible.

The decedent’s Social Security number, full legal name, date of death, and county of residence.
All probate and non-probate assets: real estate, bank and investment accounts, stocks and bonds, life insurance payable to the estate, jointly held property, and retirement accounts.
Fair market value of each asset on the exact date of death. Not purchase price. Real estate and unique personal property such as artwork or collectibles usually need a professional appraisal.³
Debts and liabilities: mortgages, outstanding loans, credit card balances, liens on Iowa property.
Each beneficiary’s name and relationship to the decedent. Relationship drives the rate.
A copy of the federal estate tax return, if one was filed. It must accompany the IA 706.

Work Through the Schedules

The IA 706 is schedule-based, and the layout will feel familiar to anyone who has seen the federal Form 706: real property on one schedule, stocks and bonds on another, then bank accounts, life insurance, jointly held property, and other assets. Each asset gets a detailed description and its date-of-death value on the schedule that fits its type. The Department requires its own forms for the main return and for Schedules J and K.

After the asset schedules, you enter the deductions, arrive at the net estate, and allocate each beneficiary’s share. The form then applies the rate that matches each beneficiary’s class. For deaths in the 2021–2024 phase-out years, you reduce the calculated tax by the applicable percentage before entering the amount owed.

Deductions

The gross estate is reduced before the tax is calculated on each share. You can deduct debts the decedent owed at death, mortgages or liens on Iowa property, certain taxes that accrued before death, funeral expenses, and administration costs such as fiduciary and attorney fees.³ If the estate holds out-of-state property, some liabilities have to be prorated so that only the Iowa-related portion is deducted.

Exemptions

Iowa Code section 450.4 removes several categories of property from the tax base regardless of who inherits. Retirement accounts (employer plans and IRAs) are exempt to the extent they will be subject to federal income tax when the beneficiary receives payments. Tangible personal property distributed in kind (household goods, vehicles, clothing) is exempt if the total value of all such property in the estate is $5,000 or less. Property passing to qualifying charities, educational institutions, religious organizations, and Iowa public libraries or hospitals is also exempt.¹

Apply the Rate for Each Beneficiary

Iowa’s inheritance tax turns on relationship, not on the size of the estate. The closer the family tie, the lower the rate, and the closest relatives pay nothing.

Exempt Beneficiaries

Surviving spouses, parents, grandparents, children (including legally adopted children and stepchildren), grandchildren, and all other lineal ascendants and descendants owe no Iowa inheritance tax on their shares.⁴ If every beneficiary falls in this group, no tax is due, though the return may still be needed for real estate clearance.

Siblings and In-Laws

A brother, sister, son-in-law, or daughter-in-law pays on a graduated scale:¹

First $12,500: 5 percent
$12,500 to $25,000: 6 percent
$25,000 to $75,000: 7 percent
$75,000 to $100,000: 8 percent
$100,000 to $150,000: 9 percent
Over $150,000: 10 percent

Other Individual Beneficiaries

Aunts, uncles, cousins, nieces, nephews, friends, and any other individual not listed above pay a higher scale:¹

First $50,000: 10 percent
$50,000 to $100,000: 12 percent
Over $100,000: 15 percent

Organizations

For-profit corporations, fraternal organizations, and social organizations that do not qualify for a federal charitable deduction pay a flat 15 percent. Out-of-state charities, educational institutions, and religious organizations pay a flat 10 percent.¹

Phase-Out Reduction for 2021–2024 Deaths

Those rates are the base. For decedents in the phase-out period, the calculated tax is reduced before payment:¹

2021 deaths: rates reduced by 20 percent
2022 deaths: rates reduced by 40 percent
2023 deaths: rates reduced by 60 percent
2024 deaths: rates reduced by 80 percent

A beneficiary who would have owed $10,000 under the base rates for a 2024 death owes $2,000 after the 80 percent reduction. The Iowa Department of Revenue publishes a separate rate schedule for each phase-out year.⁵

Deadline, Extensions, and Where to Send It

The completed IA 706 and any tax payment are due by the last day of the ninth month after the date of death. If that day is a weekend or legal holiday, the deadline moves to the next business day.² For a March 15, 2024 death, the return is due by December 31, 2024.

The Department can grant extensions on an annual basis. To qualify, file the extension request before the original due date and include an estimated payment of at least 90 percent of the tax owed. An additional extension of time to pay is available for genuine financial hardship, with supporting evidence. No extension can push the filing date past ten years after the last day of the month of death.²

Mail the return to the Iowa Department of Revenue at PO Box 10467, Des Moines, IA 50306-0467, or file and pay through the GovConnectIowa portal. The online option creates an immediate confirmation record.

One responsibility point worth flagging: the tax is legally the beneficiary’s obligation, but the personal representative has to collect and pay it from estate assets before distributing shares.³ Distribute first and you can be personally liable for any shortfall.

What Late Filing Costs

The Iowa Department of Revenue applies these penalties:⁶

Late filing: 5 percent of the unpaid tax if the return is not filed by the due date and less than 90 percent of the correct tax has been paid.
Late payment: 5 percent of the unpaid tax if less than 90 percent of the amount due is paid by the deadline.
Audit deficiency: 5 percent added to any unpaid tax discovered during a Department examination.
Fraud: 75 percent of the unpaid tax for fraudulent claims or willful failure to file. This penalty cannot be waived.
Failure to file after demand: $1,000 assessed if a return is not filed within 90 days after the Department sends a demand letter, in addition to other penalties.

Interest runs on any unpaid balance from the original due date. For 2026 the rate is 10 percent annually, or 0.8 percent per month.⁶ Penalties stack: a return that is both late-filed and underpaid triggers both the filing penalty and the payment penalty. Willful attempts to evade the tax carry criminal exposure under Iowa Code 450.53.⁷

Getting the Clearance

Once the Department reviews the return and confirms payment (or that no tax is due), it issues an inheritance tax clearance. The clearance lifts the state’s lien and lets the estate be formally closed.³ Without it, no title company will insure a transfer of Iowa real estate that was in the decedent’s name.

Processing takes time. The Department will not provide a status update unless the return was mailed more than 60 days ago and you have received no correspondence.³ If real estate needs to sell on a tight timeline, file as early as possible rather than waiting on the nine-month deadline. Returns where no tax is owed generally process faster because there is no payment to reconcile.

1
Iowa Legislature. Iowa Code 450 – Inheritance Tax
2
Iowa Administrative Code. Iowa Admin Code r 701-900.2 – Inheritance Tax Returns and Payment of Tax
3
Iowa Department of Revenue. Introduction to Iowa Inheritance Tax
4
Iowa Administrative Code. Iowa Administrative Code 701-86.2 – Inheritance Tax Returns and Payment of Tax
5
Iowa Department of Revenue. IA 706 Iowa Inheritance Tax Return
6
Iowa Department of Revenue. Penalties and Interest Rates
7
Iowa Legislature. Iowa Code 450.53 – Duty to Pay Tax – Penalties