Go to Retiree Tax Map Iowa Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line Not Tax-Friendly The Hawkeye State’s top income tax rates are steep, 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. Property taxes run high, with senior-citizen breaks reserved for those with relatively low household income. 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)In 2019: Low: 0.33% (on up to $1,638 of taxable income) High: 8.53% (on taxable income over $73,710). Iowa also has local income surtaxes used for schools and emergency services; the average rate is 0.22%, according to the Tax Foundation.Residents can deduct federal income taxes on their state return.Effective tax rate: 4.43% for single filers, 7.03% for joint filers. Social Security Benefits are not taxed. Exemptions for Other Retirement Income Taxpayers age 55 or older can exclude up to $6,000 ($12,000 for joint filers) of federally-taxed income from a pension, annuity, IRA, or other retirement plan.Military pensions and Railroad Retirement benefits are fully exempt. Property Taxes In Iowa, residents pay an average of $1,678 in taxes per $100,000 of assessed home value.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 $23,216. 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.