Iowa State Tax Guide
Iowa state tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact residents.


Iowa State Tax: Overview
Iowa's highest income tax bracket is lower than in many other states, but some residents must pay local income surtaxes in addition to Iowa state income tax. In 2026, Iowa will impose a flat income tax rate. The state no longer taxes retirement income for taxpayers 55 or older, and there is a new property tax break for retirees this year.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Iowa Income Taxes
Iowa Income Tax Range

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- The lowest Iowa personal income tax rate is 4.4% (on up to $6,000 of taxable income for single filers and up to $12,000 of taxable income for joint filers).
- The highest rate is 6% (on more than $75,000 of taxable income for single filers and more than $150,000 of taxable income for joint filers).
- The top rate will drop to 5.7% in 2024 and then to 4.82% in 2025.
- Starting in 2026, a flat rate of 3.9% will apply.
Iowa also has local income surtaxes used for schools and emergency medical services.
Iowa Tax on Retirement Benefits: All retirement income is exempt for taxpayers who are at least 55 years old. (Prior to this year, taxpayers age 55 or older could only exclude up to $6,000 ($12,000 for joint filers) of federally-taxed income from retirement plans.)
Iowa Sales Tax
Iowa has a state sales tax rate of 6%. Localities can add as much as 1%, and the average combined rate is 6.94%, according to the Tax Foundation.
- Groceries are tax-exempt.
- Prescription drugs are tax-exempt.
- Diapers and some feminine hygiene products are tax-exempt.
How Much Are Property Taxes in Iowa?
In Iowa, the average effective property tax rate is 1.57%, which is higher than in most other U.S. states.
Iowa Property Tax Breaks for Retirees
Homestead Tax Exemption for Claimants 65 Years or Older: The homestead exemption for homeowners 65 and older is new for 2023. The exemption (amount excluded from a property's taxable value) is worth $3,250 this year. In 2024, the value of the exemption increases to $6,500.
Iowa Motor Vehicle Taxes
Motor vehicle purchases are exempt from ordinary sales tax but are subject to a 5% one-time registration fee.
Iowa taxes gasoline at $0.30 per gallon.
Iowa Alcohol and Tobacco Taxes
Cigarettes | $1.36 per pack |
Other tobacco products | 50% of wholesale price |
Beer | $0.19 per gallon |
Wine | $1.75 per gallon |
Liquor | State Controlled |
Iowa Estate and Inheritance Taxes
Beginning in 2021, Iowa started phasing out its inheritance tax over a five-year period by reducing the rate of tax by 20% each year (the original base rates ranged from 5% to 15%).
For 2023, Iowa's inheritance tax ranges from 2% to 6%, depending on the amount of the inheritance and the relationship of the recipient to the decedent. However, no tax is due on property left to a surviving spouse, stepchildren, lineal descendants (children, grandchildren, etc.) or lineal ascendants (parents, grandparents, etc.). In addition, no tax is due if the estate's net value is less than $25,000.
For 2023, brothers, sisters, sons-in-law and daughters-in-law owe 2% to 4% in tax, depending on the value of the property they inherit. Uncles, aunts, nieces, nephews and all other people inheriting property in 2023 are taxed at rates ranging from 4% to 6%. The tax is completely repealed on January 1, 2025.
Related Content

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.
-
Why More Retirees Might Come Out of Retirement
It’s often not solely because of financial reasons, but because of a lack of purpose in retirement. This financial expert can relate.
By Chris Blunt Published
-
What Would Accreditation Change Mean for Real Estate Investors?
Investors determined by a test to be ‘financially savvy’ would be allowed to invest in ways that they can’t now without having a certain level of assets.
By Edward E. Fernandez Published
-
One Key Rule for Understanding 2023 RMDs
RMDs Required minimum distribution (RMD) rules can be confusing, but there is a guideline that can help.
By Kelley R. Taylor Published
-
Capital Gains Tax on Real Estate and Home Sales
Capital Gains Tax Selling your home or a rental property? Here are important capital gains tax rules to keep in mind.
By Joy Taylor Published
-
Another Big IRS Tax Change for Online Sellers
Selling Online Just in time for the holidays, the IRS is delaying a significant tax 1099-K reporting requirement for 2023.
By Kelley R. Taylor Last updated
-
Tax-Deductible Black Friday Deals for the Self-Employed
Black Friday Deals Some Black Friday deals can help the self-employed save on business expenses and taxes.
By Katelyn Washington Published
-
Did You Overpay for Thanksgiving Dinner?
Thanksgiving 2023 marks the second most expensive Thanksgiving dinner in history. But how much it cost depended on what you bought, where you live — and whether your state taxes groceries.
By Katelyn Washington Last updated
-
Most Expensive States for Retired Military Service Members
Military Retirement Veterans can keep more of their military retirement pay by avoiding these high-taxed, most expensive states for retired service members.
By Katelyn Washington Last updated
-
2023 401(k) Contribution Deadline Coming Soon
401(k) Contributions Year-end is the deadline for making max 401(k) contributions that can increase your savings for retirement and help lower your tax bill.
By Kelley R. Taylor Last updated
-
10 Worst States To Retire in if You Hate Paying Taxes
State Taxes Relatively high tax burdens make these places the worst states to retire.
By Katelyn Washington Last updated