Updated October 4, 2026. Quick answer: Yes, in nearly every case. “Iowa now has a flat tax rate of 3.8%.” The IA 100 cover page says “the Iowa capital gain deduction is repealed for most transactions”, leaving only narrow farm-related exceptions and installment sales that began before 2023.
Selling your home? How the state taxes the profit, from its own tax documents: Does Iowa tax the profit from selling your home?.
The same question for dividends and interest: does Iowa tax dividends and interest.
How Iowa treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Taxed as income at the flat rate; the capital gain deduction is repealed for most sales |
| Rate, 2025 | 3.8% flat (IA 1040 expanded instructions) |
| Exceptions still printed | Certain sales of real property used in a farming business; breeding, draft, dairy or sporting livestock by a retired farmer or a taxpayer with more than half of gross income from farming; installment sales made before January 1, 2023 |
A $50,000 long-term gain
A $50,000 long-term gain that does not fit an exception is taxed at the flat rate: computed as $50,000 x 3.8% = $1,900 of Iowa tax on the gain.
What changes in 2026
The documents read print no 2026 rate or capital gain change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Iowa taxes pensions, how Iowa taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- 2025 IA 1040 Expanded Instructions: Step 5, Iowa tax or alternate tax: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/iowa-tax
- 2025 IA 1040 Expanded Instructions: What’s new: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/whats-new
- 2025 IA 1040 Expanded Instructions: Schedule 1 (line 16 Capital Gains Deduction): https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/ia-1040-schedule-1
- IA 100 Iowa Capital Gain Deduction (cover page, 41-161): https://revenue.iowa.gov/media/4403/download?inline=
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.