IOWA PAYCHECK CALCULATOR
Flat 3.8% state tax, down from 8.53% in 2022Iowa just finished one of the fastest income tax overhauls in the country. As recently as 2022 the top rate sat at 8.53%. By 2026 it’s a flat 3.8% for every filer, rich or not, thanks to a phase-down that Governor Kim Reynolds signed into law and then accelerated through Senate File 2442. That’s a drop of nearly 4.75 percentage points in four years, and it puts Iowa’s flat rate below every other state in the Midwest that still taxes income.
An Iowa paycheck runs through federal tax, the flat state tax, Social Security, and Medicare. There’s no statewide city or county income tax, though a lot of school districts do add a small surtax on top of your state tax bill, more on that below. If you’re weighing Iowa against its neighbors, take a look at the South Dakota paycheck calculator for a no-tax comparison, the Nebraska paycheck calculator, the Illinois paycheck calculator, or the Minnesota paycheck calculator.
Estimate only, for tax year 2026. Assumes the standard deduction, no pre-tax deductions, and no school district surtax (which varies by location and can add roughly 0% to 20% of your Iowa tax liability). Actual withholding may differ.
Every Deduction on an Iowa Paycheck
- Federal income tax: Based on the 2026 IRS brackets, 10% to 37%, after the $16,100 single / $32,200 joint standard deduction.
- Iowa state income tax: A flat 3.8% on all taxable income for 2026, the same rate no matter your filing status or how much you earn. Iowa uses the federal standard deduction amount.
- Social Security: 6.2% of gross wages up to $184,500 for 2026.
- Medicare: 1.45% of all wages, no cap, plus an extra 0.9% on wages above $200,000 (single) or $250,000 (married filing jointly).
- School district surtax (local): Many Iowa school districts levy a surtax equal to a percentage of your Iowa state tax liability, not your income, ranging from 0% up to 20% depending on the district. A taxpayer with a $1,000 Iowa tax bill in a district with a 15% surtax would owe an extra $150. One county, Appanoose, layers on a small additional emergency services surtax too.
How Iowa Got to a Flat 3.8% So Fast
Iowa’s flat tax didn’t happen overnight. Governor Kim Reynolds signed House File 2317 in 2022, which set a multi-year glide path down from the old graduated system that topped out at 8.53%. Senate File 2442, passed in 2024, sped that timeline up and locked in 3.8% as the final flat rate starting with income earned in 2025. Here’s the path the rate actually took:
| Tax Year | Top Marginal Rate |
|---|---|
| 2022 | 8.53% (graduated) |
| 2023 | 6.0% (graduated) |
| 2024 | 4.82% (flat) |
| 2025 | 3.8% (flat) |
| 2026 | 3.8% (flat, holding) |
Iowa also made a major move on the retirement side starting in 2023: Social Security, pensions, IRA and 401(k) distributions, and military retirement pay are all fully exempt from state income tax for residents 55 and older. Combined with the flat 3.8% rate, a retiree living mostly on Social Security and a pension can end up owing little or nothing in Iowa income tax at all. The state also eliminated its estate tax back in 2022 and phased out its inheritance tax, so there’s no state-level bill waiting for heirs either.
Iowa vs. Its Neighbors: $70,000, Single Filer
Here’s how Iowa stacks up against three regional neighbors and one no-tax outlier, all at $70,000 in gross salary for a single filer.
| State | State Tax Owed | Est. Net Pay* |
|---|---|---|
| Iowa | ~$2,048 | ~$56,027 |
| South Dakota | $0 (no income tax) | ~$58,075 |
| Nebraska | ~$2,570 | ~$55,505 |
| Illinois | ~$3,324 | ~$54,751 |
| Minnesota | ~$3,309 | ~$54,766 |
*Net pay is after federal tax, state tax, Social Security, and Medicare, before any pre-tax deductions or Iowa’s local school district surtax. Nebraska’s 2026 top rate has been reported differently across sources during its own multi-year phase-down (figures from 4.55% to 5.84% appear depending on the source), so confirm the exact current-year Nebraska bracket before publishing. Minnesota’s standard deduction figure should also be checked against the Minnesota Department of Revenue for the exact 2026 amount.
Iowa Tax Burden: The Full Picture
| Tax Type | Iowa | National Average |
|---|---|---|
| Income tax | Flat 3.8% | ~5.0% |
| State + avg. local sales tax | 6.94% | ~7.5% |
| Effective property tax rate | 1.33% | ~0.99% |
| Estate / inheritance tax | None | Varies by state |
The honest picture on Iowa is that the income tax story gets most of the headlines, but property tax is where the state actually runs above average, at roughly 1.33% effective, among the higher rates in the country. Iowa lawmakers know it: in 2026 the state passed a property tax reform that an independent analysis from the Common Sense Institute ranked as the single largest property tax relief package passed by any state in the last decade, projected to save Iowa households about $1,463 per household over its first six years. Sales tax, by contrast, sits just under the national average, and there’s no estate or inheritance tax to worry about at all.
Iowa Is Especially Friendly to Retirees
If you’re retired or planning for it, Iowa is one of the more generous states in the country for that stage of life. Every major category of retirement income, Social Security, private and public pensions, IRA and 401(k) withdrawals, and military retirement pay, is fully exempt from Iowa income tax once you turn 55. Pair that with the flat 3.8% rate on whatever income does remain taxable, and a lot of retired Iowans end up with a very small or nonexistent state income tax bill. Iowa also offers a property tax credit or rent reimbursement of up to $1,000 for low-income residents 65 and older or totally disabled, along with a special assessment credit and a $20 additional personal income tax credit for filers 65 and up, on top of the 2026 property tax reform working its way through the system.
Federal Tax: A Worked Example
Take a single filer earning $70,000 in 2026. Subtract the federal standard deduction of $16,100, and taxable income comes to $53,900. Here’s how that runs through the brackets:
- 10% on the first $12,400 = $1,240
- 12% on $12,400 to $50,400 ($38,000) = $4,560
- 22% on $50,400 to $53,900 ($3,500) = $770
Total federal tax: $6,570, an effective rate of 9.4% on the full $70,000. Add Iowa’s flat 3.8% on the same taxable base, roughly $2,048, and the two income taxes combined still land well below what a lot of higher-tax states would charge on their own.
Frequently Asked Questions
What is the Iowa income tax rate for 2026?
Iowa has a flat 3.8% state income tax rate for 2026, the same rate for every filer regardless of income or filing status. This is the endpoint of a multi-year phase-down from a top rate of 8.53% in 2022, completed under Senate File 2442, signed by Governor Kim Reynolds, which reached the flat 3.8% rate starting with the 2025 tax year and holds it for 2026.
Does Iowa tax Social Security and retirement income?
No, not for most retirees. Iowa made all retirement income, including Social Security, pensions, IRA distributions, 401(k) withdrawals, and military retirement pay, fully exempt from state income tax for residents age 55 and older, effective 2023.
Does Iowa have local income taxes?
Iowa doesn’t have city or county income tax, but many school districts levy a school district surtax, a percentage of your Iowa state tax liability, not your income, that can run from 0% up to 20% depending on where you live. One county (Appanoose) also imposes a small emergency services surtax.
How much is taken out of a paycheck in Iowa?
An Iowa paycheck has four main deductions: federal income tax, Iowa state income tax (a flat 3.8%), Social Security (6.2% up to $184,500 in 2026), and Medicare (1.45%, plus an extra 0.9% above $200,000 for single filers). Depending on your school district, a small local surtax on your state tax liability may also apply.
Does Iowa have an estate or inheritance tax?
No. Iowa eliminated its estate tax effective January 1, 2022, and has phased out its inheritance tax as well, so heirs in Iowa don’t owe state-level tax on what they inherit.
Is Iowa’s property tax high compared to other states?
Yes, relatively. Iowa’s effective property tax rate runs around 1.33%, among the higher rates in the country even though its income tax is now one of the lowest flat rates in the Midwest. Iowa passed a major property tax reform in 2026 aimed at bringing that burden down over time.
Iowa went from a state people left off their relocation shortlist to one with a genuinely competitive flat tax in under four years, and the property tax reform suggests lawmakers aren’t done rebalancing the equation. Anyone comparing job offers against Iowa should weigh that property tax number seriously, especially for a homeowner, since it can offset a chunk of what the low income tax rate saves.
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