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HEAD-TO-HEAD TAX COMPARISON · 2026

COUNTRY A Iowa VS COUNTRY B Wisconsin

Side-by-side analysis of income tax, effective rates, and take-home pay for Iowa and Wisconsin in 2026.

Daniel · CountryTaxCalc Updated June 2026 Tax Comparison 2026
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OVERVIEW
Iowa switched to a flat 3.9% income tax in 2026 — simple, predictable, and cheaper for most earners above $75,000. Wisconsin runs 4 brackets peaking at 7.65%, and its standard deduction phases out above $15,950, meaning most middle-income filers pay on nearly their full income. At $100,000 single income, Iowa costs $3,774 versus Wisconsin's $4,826 — Iowa saves $1,052 per year. The gap widens at higher incomes. Wisconsin's standout advantage is its 60% long-term capital gains exclusion, cutting the effective capital gains rate to around 3.06% — ideal for investors. For retirees age 55 and older, Iowa is the clear winner: all retirement income (Social Security, IRA, 401k, pension) is fully exempt from Iowa income tax. Both states exempt Social Security for all ages. Iowa's property taxes average 1.56% versus Wisconsin's 1.73%, giving Iowa a modest edge there too. Wisconsin wins on sales tax: 5.5% combined versus Iowa's 7%.
Section 01

The Big Picture

Top-line rates and effective take-home for a typical earner — including income tax, social contributions, and applicable surcharges.

🌽
COUNTRY A
Iowa
TAX RATE
3.9%
Flat Rate (2026)
Single flat rate on all Iowa taxable income after HB 2317 reform
🧀
COUNTRY B
Wisconsin
TAX RATE
3.54%–7.65%
4 Progressive Brackets
4 brackets from 3.54% to 7.65% (top rate above $315,310 single)
TYPICAL ANNUAL DIFFERENCE
Moving from Wisconsin → Iowa at $100,000
$1,052
That's $88/month back in your pocket
Section 02

Tax Savings by Income Level

Net take-home after all income tax, social contributions, and surcharges — for a single employee with no dependents.
GROSS INCOME
🌽 IA TAX
🧀 WI TAX
SAVINGS
10-YEAR
$75,000
$2,799
$3,342
$543
$5,430
$100,000
$3,774
$4,826
$1,052
$10,520
$150,000
$5,724
$7,618
$1,894
$18,940
$250,000
$9,624
$12,918
$3,294
$32,940
💡

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🌽

Iowa Pros & Cons

+ PROS
  • Simple flat 3.9% rate — no bracket surprises
  • ALL retirement income exempt at age 55+ (IRA, 401k, pension, SS)
  • Social Security fully exempt at all ages
  • Lower property tax average (1.56%)
  • Groceries exempt from sales tax
− CONS
  • Higher sales tax rate (7% combined)
  • Capital gains taxed as ordinary income at 3.9%
  • No capital gains exclusion
  • Smaller standard deduction ($2,210)
🧀

Wisconsin Pros & Cons

+ PROS
  • 60% long-term capital gains exclusion (~3.06% effective rate)
  • Lower sales tax (5.5% combined in most areas)
  • Social Security fully exempt at all ages
  • No Wisconsin estate tax
− CONS
  • Top bracket 7.65% for income above $315,310
  • Standard deduction ($12,760) phases out starting at just $15,950
  • Higher property tax average (1.73%)
  • No retirement income exclusion (except Social Security)
FAQ

Frequently Asked Questions

Does Iowa or Wisconsin have lower income taxes?

Iowa is lower for most income levels. Iowa's flat 3.9% rate applies after a $2,210 standard deduction and $40 personal credit. Wisconsin has 4 brackets (3.54% to 7.65%), but its $12,760 standard deduction phases out rapidly above $15,950, so most filers above $75,000 pay on nearly their full income. At $100,000 single income, Iowa costs $3,774 versus Wisconsin's $4,826 — a $1,052 annual difference. At $250,000, Iowa saves over $3,200 per year.

Which state is better for retirees — Iowa or Wisconsin?

Iowa is significantly better for retirees aged 55 and older. Iowa exempts all retirement income from state income tax, including Social Security, IRA distributions, 401k withdrawals, and pensions. This means a retiree drawing $80,000 from an IRA pays zero Iowa income tax. Wisconsin exempts Social Security but taxes IRA, 401k, and pension income at regular bracket rates (up to 7.65%). Both states have reasonable property taxes, though Iowa's average (1.56%) is slightly lower than Wisconsin's (1.73%).

How does Wisconsin's capital gains exclusion work?

Wisconsin allows a 60% exclusion on most long-term capital gains from the sale of Wisconsin-based assets, including Wisconsin business assets and Wisconsin real property. On excluded gains, the effective Wisconsin tax rate drops to approximately 3.06% (40% of the 7.65% top rate). Iowa provides no capital gains exclusion — gains are taxed as ordinary income at 3.9%. For investors with significant long-term gains, Wisconsin's exclusion can be a meaningful advantage, provided the assets qualify.

What are the property tax rates in Iowa vs Wisconsin?

Iowa's effective property tax rate averages approximately 1.56% of assessed value, while Wisconsin averages approximately 1.73%. On a $300,000 home, Iowa costs roughly $4,680 per year in property taxes versus Wisconsin's $5,190 — a $510 annual difference. Both states are above the US national average of around 1.1%, so property tax is a meaningful cost in both states. Wisconsin's higher rate slightly offsets its lower sales tax advantage.

What are the sales tax rates in Iowa vs Wisconsin?

Iowa's combined sales tax is 7% (6% state + 1% local) in most of the state. Wisconsin's combined rate is typically 5.5% (5% state + 0.5% county). Both states exempt groceries from sales tax. Iowa's 1.5 percentage point higher sales tax rate offsets some of its income tax advantage, particularly for lower-income households who spend a higher share of income on taxable purchases.

Is Social Security taxed in Iowa or Wisconsin?

Neither Iowa nor Wisconsin taxes Social Security benefits. Iowa exempts Social Security income for all residents at all ages. Wisconsin also fully exempts Social Security benefits from state income tax. For retirees, the bigger difference is other retirement income: Iowa exempts all IRA, 401k, and pension income at age 55+, while Wisconsin taxes those distributions at its regular bracket rates.

What is Iowa's flat tax reform (HB 2317)?

Iowa passed HB 2317, which phased out multiple progressive tax brackets and replaced them with a single flat 3.9% rate effective January 1, 2026. Before the reform, Iowa had rates ranging up to 8.53%. The reform makes Iowa one of the simpler state tax systems: one rate, modest standard deduction ($2,210), small personal credit ($40), and full retirement income exemption at age 55+. The flat rate benefits higher earners most — someone at $150,000 now pays 3.9% instead of a rate approaching 6%+.

At what income level does Iowa clearly beat Wisconsin?

Iowa beats Wisconsin on income tax at virtually every income level above about $30,000. The gap is modest at $75,000 ($543/year in Iowa's favor) because Wisconsin's standard deduction still partially applies. By $100,000 the advantage is $1,052/year and by $150,000 it reaches $1,894/year. The exception is capital gains income: Wisconsin's 60% exclusion makes it more attractive for investors with large long-term gains, particularly gains from Wisconsin-source assets. For W-2 earners and retirees, Iowa consistently wins on income tax.
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