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Iowa Retirement Taxes (2026): Retirement Income Is Tax-Free at 55 — and the Inheritance Tax Is Gone

Clear Money Guide

What this state guide covers

A quick view of the questions, practical details and source notes below.

The double correction (3.8%, not 3.9% — and no inheritance tax)
How Iowa taxes retirement income (statute-cited)
Probate: fee ceilings — and a $100,000 affidavit
Is Iowa a good state to retire in for taxes?

Comparison tables scroll horizontally on smaller screens.

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: Iowa quietly became one of America’s most retiree-friendly tax states. Taxpayers 55 and older (plus disabled taxpayers and eligible survivors) pay zero Iowa tax on retirement income — pensions public and private, IPERS, 401(k) and 457(b) plans, traditional IRA distributions, and annuities under a qualifying plan, with no dollar cap (HF 2317, Iowa Code §422.7; nonqualified annuities and Section 409A plans do not qualify). Social Security was already exempt. Other income is taxed at a flat 3.8% — and the inheritance tax is fully repealed for deaths on or after January 1, 2025.

Federal civil service pensions in Iowa: does Iowa tax federal pensions.

State retirement-income forms, line by line: Iowa retirement income exclusion.

Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Iowa tax on inherited IRA withdrawals.

Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Iowa tax 403(b) and 457(b) withdrawals.

Before the tax question, the municipal fire and police system (MFPRSI), with its options and refund rules from its own handbook: Iowa MFPRSI retirement decisions.

Drawing a pension? Whether the state withholds tax from it, from its own documents: Iowa tax withholding on pension payments.

Selling your home? How the state taxes the profit, from its own tax documents: Does Iowa tax the profit from selling your home?.

Married, or planning for a spouse’s death? Whether the state is a community property state, from its own statutes: Is Iowa a community property state?.

The state’s income tax schedule: the Iowa tax brackets for 2026.

Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Iowa tax withholding on IRA and 401(k) withdrawals.

For trust income specifically: does Iowa tax trust income.

For dividends and interest specifically: does Iowa tax dividends and interest.

For annuity payments specifically: does Iowa tax annuity income.

Planning for what you leave behind? The state’s estate tax answer, from its own tax documents: Does Iowa have an estate tax?.

For military retired pay: does Iowa tax military retirement.

Saving for a child’s college? The state’s 529 break has its own page: Iowa 529 plan tax deduction.

For the sale of stocks, funds or real estate: does Iowa tax capital gains.

For 401(k) and IRA withdrawals specifically: does Iowa tax 401(k) and IRA withdrawals.

The double correction (3.8%, not 3.9% — and no inheritance tax)

Two stale figures dominate Iowa coverage. First, the rate: sites still describe Iowa “moving to a 3.9% flat tax in 2026.” That was the original 2022 schedule — SF 2442 (2024) cut it to a flat 3.8% a year early, effective tax year 2025, and 3.9% never took effect. Second, the inheritance tax: SF 619’s phase-out completed, and the Iowa Department of Revenue confirms the tax does not apply to deaths on or after January 1, 2025 — no return, no lien, regardless of who inherits. Guides still publishing heir-class rate tables are describing repealed law. Full table: inheritance tax by state.

How Iowa taxes retirement income (statute-cited)

Income taxFlat 3.8% (SF 2442, effective TY2025; unchanged for 2026)
Social SecurityNot taxed (fully exempt)
Pension / 401(k) / IRAFully exempt at 55+ (also disabled taxpayers and eligible survivors) — no dollar cap (Iowa Code §422.7). Under 55: taxable at 3.8%
Military retirementExempt regardless of age
Estate / inheritance taxNone — inheritance tax repealed for deaths on/after Jan. 1, 2025

Probate: fee ceilings — and a $100,000 affidavit

Iowa’s probate percentages are statutory maximums, not entitlements: personal-representative compensation is capped at 6% of the first $1,000, 4% of the amount between $1,000 and $5,000, and 2% of all sums over $5,000 of the gross assets listed in the probate inventory, with life insurance proceeds excluded unless payable to the estate (Iowa Code §633.197), and attorney fees are capped at the same schedule (§633.198) — courts routinely allow less. The fresh change almost nobody has yet: the very-small-estate affidavit limit doubled to $100,000 on 1 July 2026 (Iowa Code §633.356(1) as amended by 2026 Iowa Acts, House File 2660 — approved by the Governor on 16 April 2026 and effective 1 July 2026 under Iowa Code §3.7(1); the enrolled Act and the Governor’s transmittal letter were read at legis.iowa.gov on 13 August 2026) — the probate assets must be personal property only, with no interest in real estate, and 40 days must have elapsed. Separately, simplified small-estate administration covers gross probate assets up to $200,000 (Iowa Code §635.1). Context: probate cost by state · small-estate limits by state.

Is Iowa a good state to retire in for taxes?

For anyone 55+, Iowa now belongs in the same conversation as the no-income-tax states: retirement income is untaxed without caps or income tests, Social Security is exempt, there are no death taxes, and probate fees are capped rather than guaranteed. The honest limits: you must be 55 or older by December 31 of the tax year, disabled, or an eligible survivor (other early retirees pay 3.8% on withdrawals), and non-retirement income — wages, large capital gains — is taxed at 3.8%. Against neighbors still taxing withdrawals (Nebraska, Minnesota), Iowa’s case is now unusually strong.

Does Iowa tax Social Security? All 51 jurisdictions, 202643 do not tax Social Security at any income level. 8 tax it only above an income or age limit. Iowa is in the first group.Does Iowa tax Social Security? All 51jurisdictions, 202643 do not tax Social Security at any incomelevel. 8 tax it only above an income or agelimit.Iowa is in the first group.Not taxed at any income (43)Taxed only above a limit (8)ALAKAZARCACOCTDEDCFLGAHIIDILINIAKSKYLAMEMDMAMIMNMSMOMTNENVNHNJNMNYNCNDOHOKORPARISCSDTNTXUTVTVAWAWVWIWYPostal abbreviations, alphabetical. TheDistrict of Columbia is counted as ajurisdiction, which is why the total is 51 andnot 50.Counted from Clear Money Guide’s 2026 51-jurisdictionretirement-tax table, where every row carries its statutecitation. Table read 2026-08-17.
Iowa is one of 43 jurisdictions that do not tax Social Security at any income level in 2026. The other 8 exempt benefits only up to an income or age limit. Full rules and statutes: the 51-state table.

Iowa vs. common alternatives

StateSocial SecurityPension / 401(k) / IRAEstate taxInheritance tax
IowaNot taxedFully exempt at 55+NoneNone (repealed 2025)
NebraskaNot taxedFully taxable; top rate 4.55% (2026)NoneYes — county tax, 1/11/15%
IllinoisNot taxedNot taxed (all retirement income exempt)Yes — $4M cliff, not indexedNone
FloridaNot taxedNot taxed (no income tax)NoneNone

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Iowa may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Iowa

Per the SEC’s July 2026 Investment Adviser roster, Iowa has 90 SEC-registered advisory firms (#29 nationally) managing $988.3 billion (#20 by AUM). Full breakdown: Iowa advisor statistics. Reviewing fee structures: fee-drag calculator.

Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Iowa:

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Iowa

Iowa publishes a statutory percentage schedule in Iowa Code §633.197, so the maximum probate fee can be computed from it, although the court sets the actual fee as a reasonable amount up to that ceiling. And the small-estate shortcut of $100,000 does not clear a solely owned house on its own, which is the detail most guidance omits. Full detail with the governing statute, the court filing fee and the threshold: Iowa probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Iowa Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/iowa-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Figures verified against the Iowa Code 2026 (sections 422.5, 422.7, 633.197, 633.198, 633.356, 635.1), enrolled House File 2660 (2026), the Iowa Department of Revenue retirement-income, inheritance-tax and 2026 rate pages on September 30, 2026; the Governor’s approval date of House File 2660, the neighboring-state comparison rows and the SEC adviser roster figures were not re-checked.

Primary sources

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