Iowa went from a nine-bracket system topping out at 8.53% to a flat 3.8% in three years. Few states have moved that far that fast.
| Gross pay | — |
| Federal income tax | — |
| Social Security6.2% up to $184,500 | — |
| Medicare1.45%, no cap | — |
| State income tax | — |
| 401(k) contribution | — |
| Health and HSA | — |
Useful if you are comparing a job that pays monthly against one that pays every two weeks, or working out what a raise is worth per paycheck.
| Pay schedule | Gross | Take-home |
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As recently as 2022 Iowa ran nine brackets with a top marginal rate of 8.53% — higher than New York's or New Jersey's on ordinary income. Legislation compressed that into a flat 3.8%, reached ahead of the original schedule.
Iowa also conforms to the federal standard deduction, so a single filer gets $16,100 and a couple $32,200 removed before the rate applies. The combination of a low flat rate and a full federal deduction puts Iowa's effective burden for a typical salary around 2.5% to 3% of gross — a complete reversal of its former position.
The personal exemption is delivered as a $40 credit per person rather than a deduction, which is small but applies equally regardless of income.
Iowa's local income tax mechanism is unlike any other state's. Many school districts levy a surtax that is calculated as a percentage of your state income tax liability, not as a percentage of your income.
Rates run up to around 20% of state tax owed depending on the district. If you owe $1,500 in Iowa income tax and your district levies a 10% surtax, you owe an additional $150.
Because it is levied on the tax rather than the income, every reduction in the state rate automatically reduces the surtax too. It also means the surtax is invisible in any comparison of state rates. This calculator shows state tax only — look up your school district's current surtax rate and apply it to the figure shown.
Iowa exempts retirement income entirely for taxpayers aged 55 and over — pensions, 401(k) and IRA withdrawals, annuities. Social Security is separately exempt at any age.
The age threshold of 55 is lower than almost any comparable state provision, and the exemption has no income cap. Combined with Iowa's elimination of its inheritance tax, the state has repositioned itself fairly deliberately for retirees over a short period.
A flat 3.8%, down from a top marginal rate of 8.53% as recently as 2022.
A local levy calculated as a percentage of your state income tax owed rather than your income. Rates run up to around 20% of state tax depending on the district.
Not from age 55. Pensions, 401(k) and IRA withdrawals are exempt with no income cap, and Social Security is exempt at any age.
Yes — $16,100 single and $32,200 joint for 2026, which is generous relative to the 3.8% rate.