Iowa just completed a dramatic tax overhaul: as of 2025 it replaced a stack of graduated brackets (which once topped out above 8.5%) with a single flat 3.8% rate.
That makes Iowa far friendlier to take-home pay than it was a few years ago. Here is how the new flat rate works on your paycheck. See your exact take-home with the free Iowa paycheck calculator.
How Iowa's income tax works
Iowa applies a flat 3.8% to your income after a standard deduction equal to the federal amount. There are no more brackets to climb, so every worker pays the same low rate, a big change from Iowa's old nine-bracket system.
A handful of Iowa school districts add a small local surtax (a percentage of your state tax) to fund schools. We model the state tax only, so add your district's surtax if it applies.
Iowa's flat 3.8% applies after a standard deduction equal to the federal amount, so the first $15,750 of a single filer's income (2025) is shielded before the rate even starts. At 3.8%, Iowa runs one of the lowest flat rates among states that tax wages, so the federal portion of your withholding drives most of the change as your salary rises.
Your take-home on a $65,000 salary in Iowa
Here is how a $65,000 salary breaks down for a single filer, using 2026 federal and FICA figures alongside Iowa's a flat 3.8% income tax.
| Item | Annual |
|---|---|
| Federal income tax | $5,620 |
| FICA (Social Security + Medicare) | $4,973 |
| Iowa income tax | $1,858 |
| Take-home pay | $52,549 |
| Percent of gross kept | 80.8% |
On a $65,000 salary a single filer owes about $1,858 in Iowa income tax and keeps roughly $52,549, or 80.8% of gross. After the flat-tax reform, that take-home now beats neighboring Illinois, and Iowa's low housing costs in Des Moines, Cedar Rapids, and Iowa City stretch it further. Compare with Illinois.
Iowa's take-home pay across salaries
Estimated annual take-home for a single filer at common salaries, using 2026 federal and FICA figures alongside Iowa's a flat 3.8% income tax. Open the Iowa paycheck calculator to add a 401(k), HSA, or a different filing status.
| Annual salary | Take-home pay | % kept |
|---|---|---|
| $40,000 | $33,412 | 83.5% |
| $60,000 | $48,722 | 81.2% |
| $80,000 | $62,682 | 78.4% |
| $100,000 | $75,992 | 76.0% |
| $150,000 | $108,703 | 72.5% |
From nine brackets to one flat rate
Iowa's story is the speed of its reform: in just a few years it collapsed a graduated system topping out above 8.5% into a single 3.8% flat rate for 2025. The practical effect is a much lower and simpler bill for middle and upper-middle earners.
Iowa now fully exempts retirement income for residents 55 and older (401(k), IRA, and pension withdrawals) and does not tax Social Security, making it markedly more retiree-friendly than before.
The one wrinkle Iowa's flat rate hides is the school-district surtax: some districts add a small percentage of your state tax (not of your income), so two Iowans with identical pay can owe slightly different totals depending on where they live. It is modest, and this estimate leaves it out, but it is worth checking your district's rate.
How to keep more of your Iowa paycheck
Even at a low flat 3.8%, a traditional 401(k) and HSA still trim your Iowa and federal taxable income together (and the HSA avoids FICA), so maxing them mostly boosts federal savings while nudging the state bill lower.