We report a Fe Kbeta x-ray emission spectroscopy study of local magnetic moments in the rare-earth doped iron pnictide Ca_{1-x}RE_xFe_2As_2 (RE=La, Pr, and Nd). In all samples studied the size of the Fe local moment is found to decrease significantly with temperature and goes from ~0.9 mu_B at T = 300 K to ~0.45 mu_B at T = 70 K. In the collapsed tetragonal (cT) phase of Nd- and Pr-doped samples (T<70K) the local moment is quenched, while the moment remains unchanged for the La-doped sample, which does not show lattice collapse. Our results show that Ca_{1-x}RE_xFe_2As_2 (RE= Pr and Nd) exhibits a spin-state transition and provide direct evidence for a non-magnetic Fe^{2+} ion in the cT-phase, as predicted by Yildirim. We argue that the gradual change of the the spin-state over a wide temperature range reveals the importance of multiorbital physics, in particular the competition between the crystal field split Fe 3d orbitals and the Hunds rule coupling.
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