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A finite element method to compute the three-dimensional eddy current distribution in steel laminations of electrical machines is presented and applied to the loss estimation of an induction machine. Two different eddy current formulations, the A-V and A-T formulations, are investigated. The three-dimensional model is excited by boundary conditions derived from a two-dimensional field solution. The obtained eddy current losses serve as a validation basis for those from two simplified iron loss models. The first one is the traditional model based on the statistical loss theory. The second one is referred to as the hybrid model, which is based on the evaluation of magnetization curves. Both models are found to produce reasonable results for low frequency losses. The hybrid model is particularly suitable for the estimation of high-order harmonic losses. The results from the models are compared to measured no-load iron loss data.