Iowa uses a flat 3.80% income tax rate for TY2026 (SF 2367, 2022), applying to all Iowa taxable income for all filing statuses. Iowa DOR published explicit guidance confirming that qualified tip income and overtime pay are not subject to Iowa income tax under OBBBA conformity. Iowa's standard deduction is N/A (single) / N/A (MFJ). Retirement income is fully exempt for taxpayers age 55 or older. Groceries are exempt from Iowa sales tax. Iowa has no local income taxes.
State Income Tax
3.80% flat
Tips / Overtime (OBBBA)
Exempt (Iowa DOR confirmed)
Retirement (Age 55+)
Fully Exempt
Iowa Income Tax Rate 2026
Iowa's flat 3.80% rate applies to all Iowa taxable income, for all filing statuses. There are no brackets or thresholds,the same rate applies from the first dollar of Iowa taxable income. This flat rate structure was established by SF 2367 (2022) and confirmed by Iowa DOR for TY2026.
Iowa Taxable Income (All Filing Statuses)
Rate
All income
3.80%
Iowa Standard Deduction 2026
Iowa uses its own standard deduction,not the federal amount. For TY2026: N/A for single filers and N/A for married filing jointly, confirmed by Iowa DOR. Iowa's standard deduction is significantly lower than the federal standard deduction. Iowa filers use Iowa-specific deduction amounts on their Iowa 1040,the federal standard deduction does not apply to Iowa income tax calculations.
Iowa is one of the states with confirmed, explicit OBBBA conformity. The Iowa Department of Revenue published guidance stating that qualified tip income is not subject to Iowa state income tax and that qualified overtime compensation is not subject to Iowa state income tax. This explicit conformity means Iowa workers with tip income or overtime pay benefit from the OBBBA deduction at both the federal and Iowa state level. The senior bonus deduction conformity has not yet been confirmed in Iowa DOR published guidance,verify from Iowa DOR when available.
Iowa Retirement Tax,Exempt for Age 55+
Iowa exempts all retirement income from state income tax for taxpayers who are age 55 or older, effective beginning TY2023 (SF 2367, 2022). Exempt income for eligible filers includes: Social Security benefits, state and federal government pensions, military retirement, IRA distributions, 401(k) and 403(b) withdrawals, and annuities. Taxpayers under age 55 pay Iowa income tax at 3.80% on retirement distributions other than Social Security (Social Security is exempt for all Iowa filers regardless of age).
Iowa Grocery Tax,Exempt
Iowa exempts most food and food ingredients from sales tax. The effective grocery tax rate is 0% on qualifying food for home consumption. Prepared food, candy, and dietary supplements do not qualify for the food exemption and remain subject to Iowa sales tax. Iowa's local option sales tax (added by some counties and cities) generally follows the same exemption treatment for qualifying food items.
Iowa Income Tax Reform,Flat Rate Phase-In
SF 2367 (2022) transitioned Iowa from a graduated nine-bracket income tax to a flat rate. Phase-in schedule: graduated with 4.4% cap (2023) › 3.9% flat (2024) › 3.80% flat (TY2025–2026). Iowa also eliminated several income-based deductions and credits as part of this simplification. The result is one of the most straightforward state income tax structures in the country. No further reductions are currently scheduled under enacted law, though Iowa lawmakers continue to evaluate additional reforms.
Iowa uses a flat 3.80% income tax rate for TY2026, applying to all Iowa taxable income regardless of filing status or income level. This flat rate was established under SF 2367 (2022) through a multi-year phase-in: 4.4% (2023), 3.9% (2024), 3.8% (TY2025–2026). The 3.8% rate is projected to remain through TY2026 per Iowa DOR guidance. Iowa eliminated its prior graduated bracket structure through this reform.
Does Iowa conform to the OBBBA tips and overtime deductions?
Yes,Iowa explicitly conforms to both OBBBA deductions. The Iowa Department of Revenue published guidance confirming that qualified tip income is not subject to Iowa state income tax, and that qualified overtime compensation is not subject to Iowa state income tax. Iowa conforms to the federal exclusion for both. This is an explicit published conformity from Iowa DOR,not an assumption. The senior bonus deduction conformity status has not yet been confirmed in Iowa DOR published guidance. Verify senior deduction from Iowa DOR when published.
What is Iowa's standard deduction for 2026?
Iowa uses its own standard deduction amounts (not federal conformity). For TY2026, the Iowa standard deduction is N/A for single filers and N/A for married filing jointly. These amounts are confirmed by Iowa DOR for TY2026. Iowa's standard deduction amounts are notably lower than the federal standard deduction,Iowa filers cannot claim the federal deduction on their Iowa return.
Is retirement income taxed in Iowa?
Iowa exempts all retirement income for taxpayers age 55 or older, effective beginning TY2023. Exempt retirement income includes: Social Security benefits, pensions, IRA distributions, 401(k) and 403(b) withdrawals, and annuities. The exemption is age-based,taxpayers under 55 pay Iowa income tax at 3.80% on retirement distributions (with the exception that Social Security is exempt for all Iowa filers regardless of age). This retirement exemption significantly reduces Iowa's effective tax burden for older residents.
Does Iowa tax groceries?
No,Iowa exempts food for home consumption from sales tax. Most food and food ingredients are exempt from Iowa sales tax, making the effective grocery tax rate 0%. However, prepared food, candy, and dietary supplements are not exempt and remain subject to Iowa sales tax. Iowa's local option sales tax (up to 1%) applies to most sales but also follows the food exemption for qualifying items.
How did Iowa transition from graduated brackets to a flat tax?
Iowa enacted SF 2367 (2022) to reform its income tax from a complex graduated structure to a simple flat rate. Iowa previously had up to nine brackets. The phase-in schedule: 6.0% top rate (prior system) › graduated 4.4% flat (2023) › 3.9% (2024) › 3.80% (TY2025–2026). All previous graduated brackets were collapsed into a single rate. Iowa also eliminated several income-based deductions and credits as part of this simplification. The result is one of the most straightforward state income tax structures in the country.
We use cookies for analytics (Google Analytics 4) and advertising (Google AdSense). Your calculator inputs never leave your browser.Learn more
