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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 Income tax verified October 2026 Tax Comparison 2026
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OVERVIEW
Iowa has a flat 3.8% income tax (in effect since tax year 2025) — simple, predictable, and cheaper for most earners above $75,000. Wisconsin runs 4 brackets peaking at 7.65%, and its standard deduction (up to $13,960) phases out above $20,120 of income, shrinking the deduction for middle- and higher-income filers. At $100,000 single income, Iowa costs $3,148 versus Wisconsin's $4,428 — Iowa saves $1,280 per year. The gap widens at higher incomes. Wisconsin excludes 30% of most long-term capital gains (60% for farm assets), but at its 7.65% top rate that still leaves about 5.4% on gains, above Iowa's flat 3.8%. 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 1.33% versus Wisconsin's 1.32% — essentially a wash, with no meaningful edge either way. 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
3.8%
Flat Rate (2026)

Single flat rate on all Iowa taxable income (3.8% since tax year 2025)

🧀
COUNTRY B
Wisconsin
TAX RATE
3.5%–7.65%
4 Progressive Brackets

4 brackets from 3.5% to 7.65% (top rate above $332,720 single)

TYPICAL ANNUAL DIFFERENCE
Moving from Iowa → Wisconsin at $100,000
$1,280

That's $107/month more than staying in Iowa

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
$2,198
$2,944
-$746
-$7,460
$100,000
$3,148
$4,428
-$1,280
-$12,800
$150,000
$5,048
$7,309
-$2,261
-$22,610
$250,000
$8,848
$12,609
-$3,761
-$37,610
💡

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🌽

Iowa Pros & Cons

+ PROS
  • Simple flat 3.8% rate — no bracket surprises
  • ALL retirement income exempt at age 55+ (IRA, 401k, pension, SS)
  • Social Security fully exempt at all ages
  • Property tax average essentially on par with Wisconsin (1.33% vs 1.32%)
  • Groceries exempt from sales tax
− CONS
  • Higher sales tax rate (7% combined)
  • Capital gains taxed as ordinary income at 3.8%
  • No capital gains exclusion
  • Some school districts add a surtax to Iowa income tax
🧀

Wisconsin Pros & Cons

+ PROS
  • 30% long-term capital gains exclusion (60% for farm assets)
  • 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 $332,720
  • Standard deduction (up to $13,960) phases out starting at $20,120
  • Property tax average essentially the same as Iowa's (1.32% vs 1.33%)
  • 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 3.8% rate applies after the federal $16,100 standard deduction and a $40 personal credit. Wisconsin has 4 brackets (3.5% to 7.65%), but its standard deduction (up to $13,960) phases out above $20,120 of income, so filers above $75,000 get a much smaller deduction. At $100,000 single income, Iowa costs $3,148 versus Wisconsin's $4,428 — a $1,280 annual difference. At $250,000, Iowa saves over $3,700 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 that are now essentially identical — Iowa's average (1.33%) is virtually the same as Wisconsin's (1.32%).

How does Wisconsin's capital gains exclusion work?

Wisconsin generally excludes 30% of net long-term capital gains on assets held more than one year, and 60% for farm assets. At the 7.65% top rate that leaves an effective rate of about 5.36% (70% of 7.65%); in the 3.5% to 5.3% brackets it leaves 2.45% to 3.71%. Iowa provides no such exclusion — gains are taxed as ordinary income at 3.8%. Wisconsin's exclusion therefore beats Iowa's flat rate only for gains taxed in Wisconsin's lower brackets or for qualifying farm assets.

What are the property tax rates in Iowa vs Wisconsin?

Iowa's effective property tax rate averages approximately 1.33% of assessed value, while Wisconsin averages approximately 1.32% — essentially identical. On a $300,000 home, Iowa costs roughly $3,990 per year in property taxes versus Wisconsin's $3,960 — just a $30 annual difference. Both states are above the US national average of around 1.1%, so property tax is a meaningful cost in both states. Since the two states' property tax rates are now virtually the same, Wisconsin's lower sales tax remains a clear standalone advantage rather than being offset by a property tax gap.

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 income tax?

Iowa replaced its multiple progressive tax brackets with a single flat rate: 3.8% for tax year 2025, continuing in 2026 (Iowa Code 422.5). Before the reform, Iowa had rates ranging up to 8.53%. The reform makes Iowa one of the simpler state tax systems: one rate, the federal standard deduction ($16,100 single), a small personal credit ($40), and full retirement income exemption at age 55+. The flat rate benefits higher earners most — someone at $150,000 pays 3.8% on taxable income instead of the old graduated rates.

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 ($746/year in Iowa's favor) because Wisconsin's standard deduction still partially applies. By $100,000 the advantage is $1,280/year and by $150,000 it reaches $2,261/year. The exception is capital gains income: Wisconsin's 30% exclusion (60% for farm assets) can leave a lower rate than Iowa's flat 3.8% on gains taxed in its lower brackets. For W-2 earners and retirees, Iowa consistently wins on income tax.
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