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)/403(b)/457 plans, traditional IRA distributions, annuities — with no dollar cap (HF 2317, Iowa Code §422.7). 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 Other income is taxed at a flat 3.8% — and the inheritance tax is fully repealed for deaths on or after January 1, 2025.
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 Guides still publishing heir-class rate tables are describing repealed law.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 tax | Flat 3.8% (SF 2442, effective TY2025; unchanged for 2026) |
| Social Security | Not taxed (fully exempt) |
| Pension / 401(k) / IRA | Fully exempt at 55+ (also disabled taxpayers and eligible survivors) — no dollar cap (Iowa Code §422.7). Under 55: taxable at 3.8% |
| Military retirement | Exempt regardless of age |
| Estate / inheritance tax | None — inheritance tax repealed for deaths on/after Jan. 1, 2025 |
Probate: fee ceilings — and a brand-new $100,000 affidavit
Iowa’s probate percentages are statutory maximums, not entitlements: personal-representative compensation is capped at 2% of gross probate assets above $5,000 (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: for affidavits presented on or after July 1, 2026, the very-small-estate affidavit limit doubles to $100,000 (Iowa Code §633.356, amended by 2025 Iowa Acts ch. 148; it was $50,000) — no real property, 40-day wait. 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 actually be 55 (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.
Iowa vs. common alternatives
| State | Social Security | Pension / 401(k) / IRA | Estate tax | Inheritance tax |
|---|---|---|---|---|
| Iowa | Not taxed | Fully exempt at 55+ | None | None (repealed 2025) |
| Nebraska | Not taxed | Fully taxable; top rate 4.55% (2026) | None | Yes — county tax, 1/11/15% |
| Illinois | Not taxed | Not taxed (all retirement income exempt) | Yes — $4M cliff, not indexed | None |
| Florida | Not taxed | Not taxed (no income tax) | None | None |
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.
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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 is one of only seven jurisdictions that publish an actual statutory percentage schedule, so the probate fee can be computed exactly rather than estimated. 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.
Primary sources
- https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/retirement-income-tax-guidance
- https://taxfoundation.org/data/all/state/state-income-tax-rates-2026/
- https://revenue.iowa.gov/inheritance
- https://www.legis.iowa.gov/docs/code/633.197.pdf
- https://www.legis.iowa.gov/docs/code/633.356.pdf
- https://law.justia.com/codes/iowa/title-xv/chapter-633/section-633-356/