Updated October 4, 2026. Quick answer: Often no. Iowa excludes retirement income for a taxpayer who is “55 years of age or older on December 31” (or disabled, or a qualifying survivor). Its guidance covers “individual retirement accounts, plans maintained or contributed to by an employer” and plans “authorized under section 401(k) of the IRC”. Under 55 and not disabled, the withdrawal is taxed at a flat 3.8%.
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.
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.
What Iowa does with 401(k) and IRA withdrawals
Iowa’s instructions say “Iowa now has a flat tax rate of 3.8%”. The rate in the Iowa Code reads “at a rate of three and eight-tenths percent”. The exclusion applies to each spouse on a joint return.
| Item | What the documents say |
|---|---|
| Treatment | Excluded for a taxpayer 55 or older, disabled, or a qualifying survivor; no dollar cap printed |
| State rate | 3.8% flat |
| Source | Iowa Department of Revenue, retirement income guidance and 2025 IA 1040 instructions; Iowa Code 422.7 and 422.5 |
A $40,000 withdrawal
For a taxpayer 55 or older on December 31, the $40,000 withdrawal is excluded and adds $0 of Iowa tax. For a taxpayer under 55 who is not disabled, it adds $1,520 at the flat rate (computed as $40,000 times 3.8%), before any deduction.
What changes in 2026
No change for 2026 appears in the documents read for this page.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Iowa taxes pensions, how Iowa taxes retirement income, whether Iowa taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- Retirement Income Tax Guidance: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/retirement-income-tax-guidance
- 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: Iowa tax or alternate tax: https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/iowa-tax
- Iowa Code section 422.7 (Taxable income computation): https://www.legis.iowa.gov/docs/code/422.7.pdf
- Iowa Code section 422.5 (Tax imposed): https://www.legis.iowa.gov/docs/code/422.5.pdf
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.