Taxes in Iowa

Iowa introduced several significant tax changes to continue its efforts to ease the tax burden on retirees. Retirement income, including pensions, 401(k) distributions, and IRA withdrawals, remains exempt from state income tax for individuals aged 55 and older. The state has already repealed the inheritance tax, effective January 1, 2025. Moreover, recent property tax reforms consolidate levies and cap their growth, limiting tax increases. These changes reflect Iowa’s commitment to providing tax relief while addressing rising property tax concerns.

For information regarding taxes in other states, see Retirement Taxes by State.

Iowa Tax Rates

State Sales Tax	6%
Avg State/Local Sales Tax	6.94%
Gas Tax	$0.30 per gallon
Diesel Tax	$0.24 per gallon
Cigarette Tax	$1.36 per pack
Income Tax	5.7%
Effective Tax Rate:	5.7%
Property Tax	1.4%
Social Security Tax	None
Medical/Dental Deduction:	Full
Federal Income Tax Deduction:	None
Retirement Tax	None

Iowa State Taxes Explained

Iowa Sales Tax

As of 2025, Iowa imposes a state sales tax of 6%, with local governments permitted to levy an additional local option sales tax of up to 1%.

Iowa exempts diapers and menstrual products from its sales tax since January 2022.

Iowa Income Taxes

In 2022, Iowa consolidated its nine individual income tax rates into four, reducing the top rate from 8.53% to 6%. By 2025, the state has implemented a flat income tax rate of 5.7% for all taxpayers. This change was enacted through Iowa Senate File 2442 in May 2024. 

The state plans to further reduce the flat tax rate to 3.9% by 2026.

Iowa Property Taxes

Iowa’s effective property tax rate is 1.4%, or $4,410 on the $315,000 median home value. Iowa property taxes vary by county. There are more than 2,000 taxing authorities in the state, and multiple authorities tax most property.

Iowa offers several property tax relief programs, some specifically for seniors and retired military members. The Rent Reimbursement and Property Tax Credit is available for citizens who are 65 and older or at least 18 years old with a disability. Income must be under $26,219. Approved applicants who own a home or mobile home get a credit on their property tax bill. Renters receive a rebate check.

See Iowa Tax Credits and Exemptions for a full list of property tax relief available from the state.

Iowa Retirement Taxes

Social Security and military pensions are fully exempt. Since 2023, all retirement income is exempt for taxpayers 55 and older.

Iowa Estate and Inheritance Taxes

As of January 1, 2025, Iowa has fully repealed its inheritance tax; no inheritance tax is imposed on any beneficiary, regardless of their relationship to the decedent or the amount inherited.

Iowa imposes no estate tax.

For further information, visit the Iowa Department of Revenue or see the state’s Contact page for phone numbers or email addresses.