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State guides · IA

How Iowa taxes retirement income

Some 2026 figures pending confirmation  Tax year 2026 · research last updated October 2, 2026

  • Iowa doesn't tax Social Security benefits.
  • Exclusions and subtractions for retirement income (details below):
    • Retirement income exclusion: from age 55.
  • Rates for 2026: 3.8% flat rate.

At a glance

Income taxYes
Rates (2026)3.8% flat rate
Starts fromFederal taxable income
Personal credit$40 per person
Age 65 and older$20 extra credit per person
Social SecurityNot taxed
Retirement income exclusions1 (see below)
Roth conversionsGenerally not taxed (see below)
Capital gainsTaxed like other income
Local income taxYes, in some places (see below)

Social Security

Iowa doesn't tax Social Security benefits.

Pensions, IRAs and 401(k)s

Retirement income exclusion (full exclusion, 2023+)

Age: 55+ · Applies to: pensions, IRA distributions, roth ira, Roth conversions, 401(k) distributions, 403b, 457b, SEP plans, simple, keogh, annuities (qualified plan)

For tax years beginning on or after Jan. 1, 2023, retirement income is fully excluded (Schedule 1 line 7) for a taxpayer who is 55 or older on Dec. 31 of the tax year, disabled, or a surviving spouse / survivor with an insurable interest in someone who qualified. Each spouse must qualify on their own; the exclusion applies only to the qualifying spouse's retirement income. Qualifying income: governmental or other pension/retirement plans, defined benefit and defined contribution plans, traditional and Roth IRAs, Roth conversion income, SEP, SIMPLE, 401(k), 457(b), IPERS, Keogh, 414(x). Not qualifying: IRC 409A nonqualified deferred compensation and nonqualified annuities. Unlimited amount. Interest, dividends and capital gains do not qualify.

Roth conversions

Iowa generally doesn't tax Roth conversions; the conditions are in the rules above.

Capital gains

Taxed like other income, at the rates above. For securities; Iowa capital gain deduction (Schedule 1 line 16, IA 100 forms) applies only to specific assets such as certain real property/business interests with holding and material-participation tests.

Credits and relief for older residents

  • Low-income exemption for age 65+ (Iowa Code 422.5(3)(a)): no Iowa tax if at least 65 on Dec. 31 and net income is $24,000 or less (single and other statuses) or $32,000 or less (MFJ, HOH, surviving spouse; applies if either spouse is 65+). Net income for this test adds back the federal standard/itemized deduction, personal exemption deduction (incl. the federal enhanced senior deduction) and QBI deduction. Tax is limited so net income does not drop below the threshold.
  • Alternate tax for 65+ MFJ/HOH/QSS (Iowa Code 422.5(3)(b)): if net income exceeds $32,000, tax is the lesser of regular tax or 4.3% x (net income - $32,000).
  • Exemption credits: $40 personal credit (form says enter 2 if filing status MFJ or HOH), $20 for each taxpayer 65+ and $20 for each blind taxpayer.

Local income taxes

School district surtax and EMS surtax: IA 1040 line 19 multiplies the state tax after credits by the surtax percentage for the school district of residence (as of Dec. 31). It is a percentage of state tax, not of income; rates vary by district. The app can treat this as a user-entered local rate expressed as a % of state tax.

More detail from our research notes

Iowa taxable income = federal taxable income (federal 1040 line 15) + net Iowa modifications (Schedule 1). Because the starting point is federal taxable income, the federal standard or itemized deduction and QBI deduction are already applied, and the 2025 IA 1040 also flows through the federal Enhanced Deduction for Seniors (line 1f, from federal Schedule 1-A) as a personal exemption. Taxable Social Security (federal 1040 line 6b) is subtracted on Schedule 1 line 5. For a retiree 55+ with only Social Security, retirement-plan income and Roth conversions, Iowa taxable income is typically only interest, dividends, capital gains and other non-retirement income, less federal deductions. Flat 3.8% under Iowa Code 422.5(1)(a) (graduated rate section 422.5A repealed for tax years beginning on/after Jan. 1, 2025). Age tests: 55 on Dec. 31 (exclusion); 65 on Dec. 31 (low-income exemption).

Pending confirmation

These points were still being confirmed against Iowa's published 2026 forms when this page was built. Most are waiting on forms the state publishes around the turn of the year.

2 items
  • 2026 IA 1040 not yet published (expected Dec 2026/Jan 2027 at https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions). Statute values confirmed for 2026 by Iowa Code 2026 422.5 (3.8%, $9,000/$13,500, $24,000/$32,000, 4.3% alternate) and 422.12 ($40/$20); no 2026 Iowa Act amending them was found (LSA memos of 2026-07-01 and 2026-09-11 still describe the flat 3.8%).
  • School district / EMS surtax rates not captured (district list in IA 1040 instructions).

Sources

Every figure comes from these documents, mostly the state's own forms, instructions and statutes.

  1. 2025 IA 1040 Schedule 1 expanded instructions, line 15 health insurance deduction (65+, worksheet income < $100,000; federal itemizers keep the premiums' share of the 7.5% floor) (research/states/itemized.json)https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/ia-1040-schedule-1
  2. Flat 3.8% rate; 65+ low-income exemption ($24,000/$32,000) and 4.3% alternate tax (Iowa Code 2026 section 422.5); Net income for the 422.5(2)/(3) exemption = net income as defined in 422.7 (after the retirement-income subtraction) plus the std/itemized, personal exemption (incl. Schedule 1-A senior deduction, per 'Who must file' list) and QBI deductions (Iowa Code…https://www.legis.iowa.gov/docs/code/422.5.pdf
  3. Iowa Code 422.5A graduated rates repealed for tax years beginning 2025+; Iowa Code 422.5A (bracket phase-down) repealed by 2024 Acts ch 1094 for TY2025+; no further scheduled rate stepshttps://www.legis.iowa.gov/docs/code/422.5A.pdf
  4. 2025 IA 1040: federal taxable income starting point, $40/$20 exemption credits, 3.8% line 5, Schedule 1 subtractions (SS line 5, IRA/pension line 7, capital gains deduction line 16), school district/EMS surtax line 19https://revenue.iowa.gov/media/4401/download
  5. Retirement income exclusion eligibility (55 by Dec. 31, disabled, surviving spouse) and qualifying plans incl. Roth conversionshttps://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/retirement-income-tax-guidance
  6. Low-income exemption thresholds on IA 1040 line 4 instructionshttps://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/iowa-taxable-income
  7. What's new 2025/2026 (Enhanced Deduction for Seniors added; lump-sum rule; 2026 estimated-tax threshold)https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/whats-new
  8. Rolling IRC conformity ('the state will automatically conform with any changes made to the Internal Revenue Code in the calculation of federal taxable income'); exceptions listed are depreciation pre-2021, sec. 179, business interest. So the federal senior…https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/conformity-irc
  9. HOH gets 2 personal credits: expanded instructions Intro 6 'If you are filing married filing jointly (status 2) or head of household (status 4) ... enter 2'https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions
  10. LSA memo 2026-09-11 (twelve-month receipts): flat 3.8% since TY2025, full retirement-income exemption since 2023https://www.legis.iowa.gov/docs/publications/TT/1615520.pdf

Taxtirement's Iowa calculation is also checked against a second, independent implementation on 1,000 random households. How we check our numbers.

See your own years. Taxtirement applies these Iowa rules, and the federal and Medicare rules, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.

This page summarizes Iowa's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.