Tool | November 2018

State-by-State Guide to Taxes on Retirees

Iowa

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The Bottom Line
Map of Iowa

Not Tax-Friendly

The Hawkeye State’s top income tax rate is a steep 8.98%, but retirees can exclude up to $6,000 of retirement-plan distributions if single ($12,000 if married) from state income taxes. Social Security benefits are free of state income tax.

State Sales Tax

6.0% state levy. Localities can add as much as 1%, and the average combined rate is 6.82%, according to the Tax Foundation.

Income Tax Range

Low: 0.36% (on up to $1,598 of taxable income)

High: 8.98% (on taxable income over $71,910) — for 2018.

In 2019: Low: 0.33% (on up to $1,628 of taxable income) High: 8.53% (on taxable income over $73,261) Iowa allows school districts to tax income as well. The average levy statewide is 0.22%, according to the Tax Foundation.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Taxpayers 55 or older or disabled (or a surviving spouse or a survivor having an insurable interest in an individual who would have qualified for the exclusion during the year) can exclude as much as $6,000 if single ($12,000 if married) of taxable income from a pension, annuity, distributions from an IRA or self-employed retirement plan, deferred compensation or other retirement-plan benefits. Out-of-state government pensions qualify for exemptions.

IRAs

Qualifies for exemptions.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Qualifies for exemptions.

Private Pensions

Qualifies for exemptions.

Public Pensions

Qualifies for exemptions. Out-of-state government pensions also qualify for exemptions. Military benefits are exempt.

Property Taxes


The median property tax on Iowa’s median home value of $132,800 is $1,986.

Tax breaks for seniors:A property tax credit of up to $1,000 is available to residents age 65 or older. The program is limited to those with 2018 household income less than $22,855.

Vehicle Taxes

Vehicles are subject to a one-time registration fee of 5% of the sales price.

Inheritance and Estate Taxes

Iowa's inheritance tax ranges from 0% to 15%, depending on the amount of the inheritance and the relationship of the recipient to the decedent, with these exceptions: No tax is due on property left to a surviving spouse, stepchildren, lineal descendants (children, grandchildren, etc.) or lineal ascendants (parents, grandparents, etc.), and no tax is due if the estate’s net value is less than $25,000.

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