Tool | November 2017

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Map of Iowa

Mixed Tax Picture

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 6.80%, according to the Tax Foundation.

Income Tax Range

Low: 0.36% (on up to $1,554 of taxable income)

High: 8.98% (on taxable income over $69,930).

Iowa also allows residents to deduct federal income tax from state taxable income.

Effective income tax rate: 5.3%/individual, 7.6%/joint

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.


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 $133,100 is $1,965.

Tax breaks for seniors: A property tax credit is available to residents who meet annual household low income requirements and who are age 65 or older, or totally disabled. For 2016, household income had to be less than $22,360.

Vehicle Taxes

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

Inheritance and Estate Taxes

Iowa has no estate tax. The 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.