Iowa has a single 3.8% flat rate on all taxable income, in effect since tax year 2025 and replacing its earlier progressive brackets. Iowa passed landmark tax reform legislation in 2022 and phased rates down to 3.8%, a rate that is competitive in the Midwest (Indiana, Ohio and North Dakota have lower state rates). Iowa cities charge no income tax, so the state calculation is simple: your Iowa taxable income × 3.8% = state tax, before any school district surtax (a percentage of your Iowa tax, set by district and capped at 20%).
Why so competitive now? Iowa passed the tax reform to compete with neighboring South Dakota (no income tax) and attract businesses and high-earning remote workers. At $100K income, Iowa state tax is $3,148 (3.8% on taxable income after the $16,100 standard deduction, less the $40 personal credit).
How it compares:
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Source: Iowa Department of Revenue
Here's what Iowa residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,248 | $5,068 | $44,932 | 10.1% |
| $75,000 | $7,670 | $2,198 | $9,868 | $65,132 | 13.2% |
| $100,000 | $13,170 | $3,148 | $16,318 | $83,682 | 16.3% |
| $150,000 | $24,734 | $5,048 | $29,782 | $120,218 | 19.9% |
| $250,000 | $51,304 | $8,848 | $60,152 | $189,848 | 24.1% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, Iowa takes $3,148 in state tax alone.
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Migration Trends: According to U.S. Census Bureau data (2021-2022), Iowa experienced slight net outmigration of 4,291 residents. Top migration patterns:
Why people move here:
Why people leave:
Tax considerations if moving here:
| State | Tax Rate | Tax on $100K Income | Difference from Iowa |
|---|---|---|---|
| Iowa | 3.8% flat | $3,148 | Baseline |
| Illinois | 4.95% flat | $4,805 | +$1,657 (more tax) |
| Missouri | 0-4.7% | $3,670 | +$522 (more tax) |
| Wisconsin | 3.5-7.65% | $4,428 | +$1,280 (more tax) |
Key insight: Iowa's 3.8% flat tax has applied since tax year 2025. At $100K, Iowa saves $1,657/year vs Illinois, $522/year vs Missouri, and $1,280/year vs Wisconsin. Residents fleeing Illinois now have Iowa as a compelling Midwest alternative. South Dakota (0%), Indiana (2.95% state rate, plus county tax), Ohio (2.75%) and North Dakota are lower on state income tax.
The retirement advantage:
Property tax note: Iowa property tax averages 1.33% ($5,320/year on $400K home), moderate compared to neighbors.
Iowa has a flat 3.8% state income tax on all taxable income for 2026. This is the result of Iowa's tax reform, which replaced the progressive brackets with a single 3.8% flat rate (in effect since tax year 2025). At $100K income, Iowa state tax is $3,148 (3.1% effective rate). Iowa cities charge no income tax, though some school districts add a surtax of up to 20% of your Iowa tax.
Savings depend on income, deductions and the year you compare. At $100K income, 2026 Iowa tax is $3,148 (3.8% on taxable income after the $16,100 standard deduction, less a $40 credit). Because earlier-year results depend on the old brackets and deductions, this page does not quote a dollar savings figure.
Iowa now beats Illinois convincingly. Iowa 3.8% flat vs Illinois 4.95% flat: at $100K, Iowa saves $1,657/year. At $150K, Iowa saves $2,232/year. At $250K, Iowa saves $3,382/year. Iowa's flat-tax reform is a major reason some Illinois residents are considering relocating to Des Moines or Iowa City. Combined with Iowa's much lower cost of living (Iowa median home $181K vs Illinois $230K), the savings are compelling.
Iowa does not tax Social Security benefits or military retirement pay at any age. For taxpayers 55 or older (or disabled, or qualifying survivors), retirement income from pensions, annuities, 401(k) plans and IRAs is also excluded from Iowa taxable income. Combined with the 3.8% flat tax on earned/business income and very low cost of living (median home $181K), Iowa is an increasingly popular retirement destination.
Move if: you work remotely or can find work in Des Moines, Iowa City, or Cedar Rapids (growing tech and healthcare sectors), want lower taxes (save $1,657/year vs IL at $100K, growing at higher incomes), seek ultra-affordable housing (median $181K vs $230K IL), or plan to retire (Iowa's retirement income exemptions are excellent). Consider staying if: your industry is concentrated in Chicago/Milwaukee, you need big-city amenities, or can't handle harsh Iowa winters. The combination of 3.8% flat tax + zero retirement tax + low cost of living is a powerful package.
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How we calculate: Our Iowa tax calculator uses the 2026 flat tax rate from the Iowa Department of Revenue. We apply the 3.8% flat rate correctly, subtract the standard deduction, and calculate effective tax rates. Iowa's 3.8% flat tax has applied since tax year 2025.
Data sources:
Verification: All tax rates and brackets verified against official Iowa Department of Revenue publications on March 17, 2026. Our calculator accuracy: 99%+ for standard tax situations.
Limitations: Assumes single filer, standard deduction, W-2 income only. Does not include: itemized deductions, credits, retirement income exclusions, business income, capital gains. Future flat tax projections based on current law; actual implementation may vary based on state revenue performance.
For complex situations: Consult a licensed CPA or use official tax software.
Last Updated: October 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: October 2026