Results are estimates for educational purposes only. Based on 2026 IRS federal brackets and Iowa state tax rates. Always consult a qualified tax professional.
Iowa income tax overview
Iowa completed one of the most dramatic tax overhauls in the country, moving from a complicated nine-bracket progressive system with a top rate of 8.98% down to a single flat rate of 3.9% effective 2025. This places Iowa among the lowest flat-tax states in the nation, a sharp reversal from its reputation as a high-tax Midwest state just a few years earlier. The reform was phased in over several years and is now fully in effect for the 2026 tax year. Iowa also exempts retirement income — including 401k, IRA, and pension distributions — for taxpayers aged 55 and older, making the state notably friendly to retirees. The flat rate applies uniformly regardless of income level, which simplifies filing considerably compared to the old bracket system.
2026 Iowa income tax rates
Tax rate
Income range (single filer)
3.9% flat
All taxable income (2026)
Worked example: $75,000 salary in Iowa
A $75,000 salary in Iowa results in approximately $2,925 in state income tax (3.9% flat), plus $12,580 federal tax, $4,650 Social Security, and $1,088 Medicare. Annual take-home is approximately $53,757, or $2,068 bi-weekly.
Key facts: 3.9% flat rate (fully phased in 2025) · Retirement income exempt at 55+ · No local income tax
Frequently asked questions — Iowa income tax
Iowa's legislature passed a multi-year tax reform plan to simplify the tax code and make the state more competitive for retirees and remote workers. The nine-bracket system with a near-9% top rate was phased down to a single 3.9% flat rate by 2025.
No. Iowa exempts retirement income including 401k, IRA, pension, and annuity distributions for taxpayers aged 55 and older. Social Security is also not taxed.
No. Iowa cities and counties do not levy local income taxes, though some school districts impose a small surtax on the state income tax liability itself, not on wages directly.
Before reform, Iowa had a progressive system with nine brackets and a top marginal rate of 8.98% — one of the higher rates in the Midwest. The phase-down to 3.9% represents one of the largest state tax cuts in recent history.
Yes. At 3.9% flat, Iowa is now lower than Minnesota (top 9.85%), Wisconsin (top 7.65%), and Nebraska, making it considerably more attractive for high earners than it was a decade ago.
Compare Iowa to other states
Use our US income tax calculator to compare your take-home pay across all 50 states. You may be surprised how much location affects your net income.