Iowa charges a flat 3.8% and takes $2,578 from an $85,000 salary. A single filer takes home $66,049.
Then, if your school district levies one, you pay a surtax — and Iowa's is structured unlike any other local income tax in the country. It is charged as a percentage of the state tax you owe, not as a percentage of your income.
That single design choice is why Iowa's local layer gets missed. Every other state's local tax can be estimated by applying a rate to your salary. Iowa's cannot, and applying a district's percentage to your income instead of to your tax overstates it by a factor of more than thirty.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; Iowa's rate and surtax structure come from this site's own sourced 50-state dataset, which cites Form IA 1040. Every dollar figure computed by the site's engine is on a single filer taking the state's standard deduction, with no dependents or pre-tax deferrals unless stated. District-by-district surtax percentages are not recorded in this site's dataset and are never included in any total — see section 3.
1. A flat rate with a federal-sized deduction
Iowa's income tax is a flat 3.8%, applied after a standard deduction that matches the federal figure at $16,100 for a single filer.
That combination is unusual and it is generous. Most states with a low flat rate pair it with a small deduction — Pennsylvania allows nothing, Indiana $1,000, Kentucky $3,360. Iowa allows the full federal amount.
| Federal | Iowa | |
|---|---|---|
| Salary | $85,000 | $85,000 |
| Standard deduction | −$16,100 | −$16,100 |
| Taxable income | $68,900 | $68,900 |
Iowa taxes exactly the same base the federal system does, which makes the arithmetic unusually easy to follow: 3.8% of your federal taxable income is very close to your Iowa tax.
Iowa is newly flat
Iowa reached this structure after several years of phased rate reductions that collapsed a multi-bracket system into a single rate. The practical consequence for anyone reading older material: bracket tables for Iowa published a few years ago are obsolete, and a calculator using them will produce a figure that no longer resembles the current one.
2. What it costs across incomes
| Salary | Iowa tax | Marginal rate | Take-home (before surtax) |
|---|---|---|---|
| $30,000 | $488 | 3.8% | $25,797 |
| $45,000 | $1,058 | 3.8% | $37,279 |
| $60,000 | $1,628 | 3.8% | $48,762 |
| $85,000 | $2,578 | 3.8% | $66,049 |
| $120,000 | $3,908 | 3.8% | $89,342 |
| $175,000 | $5,998 | 3.8% | $124,880 |
Flat at every income, so no bracket confusion.
At $30,000, Iowa takes $488 — about 1.6% of gross, because the $16,100 deduction shelters more than half the salary. That makes Iowa notably inexpensive at the bottom of the income range, in the same way Missouri is and for the same reason.
A joint filer on $85,000 pays $1,926, $652 less than a single filer, from the doubled deduction.
Run your own salary against Iowa's flat rate3. A surtax on your tax
Iowa has a genuine local income tax and it is commonly missed, because of how it is computed.
Form IA 1040 line 19 reads: "School district surtax or EMS surtax: multiply line 18 by the percentage from list." Line 18 is your Iowa tax. Line 20 is "Total state tax and local surtax."
So the base is tax owed, not income.
Two separate levies ride on that line:
- A school district income surtax, set independently by each of Iowa's school districts
- An emergency medical services (EMS) income surtax, adopted by some counties
Why this matters practically
To work out your surtax you multiply your Iowa tax by the district percentage — not your salary.
| Amount | |
|---|---|
| Iowa tax on $85,000 | $2,578 |
| At a 5% district surtax | × 5% |
| Surtax owed | ≈$129 |
Applying that same 5% to your $85,000 salary instead would give $4,250 — thirty-three times too much.
This is the mirror image of the Maryland error. In Maryland, people wrongly compute the county tax as a percentage of the state tax when it is actually a percentage of income, understating it. In Iowa, people compute the surtax as a percentage of income when it is actually a percentage of tax, overstating it enormously.
The rule to carry: check what the base is before applying any local rate. The two states sit at opposite ends of that mistake.
The layer is genuinely small
Because it rides on tax rather than income, Iowa's local layer is one of the mildest in the country. At a 5% district surtax the figure is about $129 on an $85,000 salary — around $11 a month.
Compare Ohio's municipal tax at roughly $2,100 on the same salary, or Maryland's county tax at about $2,509. Iowa's structure produces a local burden an order of magnitude smaller.
District percentages vary and are not recorded in this site's dataset, so the 5% above is illustrative. Your district's figure appears on the list referenced by Form IA 1040 and on your own return.
4. The full picture on $85,000
| Amount | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| Iowa income tax | −$2,578 |
| Take-home before surtax | $66,049 |
| District surtax at 5%, not included | ≈−$129 |
Federal takes $16,373 — more than six times Iowa's state figure, and the surtax is small enough to be a rounding item by comparison.
5. Where Iowa ranks
At $85,000, Iowa's $2,578 is seventh-lowest of the 41 income-tax states — and it is seventh by $7, which is the kind of margin a ranking should not be trusted to survive:
| State | Tax on $85,000 |
|---|---|
| North Dakota | $377 |
| Ohio | $1,621 |
| Arizona | $1,731 |
| Louisiana | $2,164 |
| Indiana | $2,478 |
| Rhode Island | $2,571 |
| Iowa | $2,578 |
| Pennsylvania | $2,610 |
| Kentucky | $2,857 |
| Missouri | $3,058 |
| Illinois | $4,063 |
And unlike most of the states above it, Iowa's figure is very nearly the complete answer. Ohio's $1,621 becomes roughly $3,700 with a typical municipal tax. Indiana's $2,478 becomes roughly $4,158 with a 2% county. Iowa's $2,578 becomes about $2,707.
On a combined basis Iowa is one of the genuinely cheapest states in this region, and its ranking on state figures alone understates that rather than overstating it — which is the opposite of the pattern nearly everywhere else in this series.
6. Reducing what Iowa takes
Pre-tax deferrals reduce Iowa tax. Iowa starts from federal adjusted gross income, so a traditional 401(k) contribution lowers Iowa taxable income. A $10,000 deferral saves $380 at the 3.8% rate, on top of the federal saving.
And it reduces the surtax too, automatically — because the surtax is a percentage of your Iowa tax, anything that reduces the tax reduces the surtax proportionally. That is a small structural bonus no other state's local tax offers.
HSA contributions add the FICA saving of 7.65%, through payroll under a cafeteria plan.
Iowa allows itemized deductions where they exceed the standard deduction, following federal rules in most respects.
7. Retirement in Iowa
Iowa does not tax Social Security benefits.
Iowa also exempts retirement income for taxpayers aged 55 and over, covering distributions from qualified plans, IRAs, and pensions. That is among the most generous retirement income treatments in the country — not a capped exclusion of a few thousand dollars, but a broad exemption.
For a retiree over 55 drawing on Social Security and a 401(k), Iowa's income tax bill can be zero or close to it.
The school district surtax rides on state tax owed, so if the state tax is zero, the surtax is zero as well. The structure compounds in the retiree's favour.
The shape: Iowa is unremarkable for workers and exceptional for retirees. The gap between the two positions is one of the widest in this series.
8. Two Iowans on the same salary
A worker in a district with no surtax, earning $85,000. State $2,578, no local tax at all, total $2,578.
A worker in a district with a 5% surtax. State $2,578, surtax about $129, total $2,707 — a difference of $129, or roughly $11 a month.
A retired Iowan over 55 drawing $60,000 from a pension and Social Security. Potentially zero Iowa income tax, and therefore zero surtax, regardless of district.
The gap between the two workers is small enough that it should never decide where someone lives in Iowa. The gap between a worker and a retiree is enormous. That is an unusual profile, and it is the single most important thing to know about Iowa's income tax.
9. Moving to or from Iowa
The state figure is close to complete, which is rare in this region. Anyone comparing Iowa to Ohio, Indiana, Illinois or Missouri on state figures alone is being unfair to Iowa, because those comparisons omit local layers that are large elsewhere and tiny here.
Illinois is the natural comparison across the Mississippi: Illinois takes $4,063 at $85,000 with no local income tax layer, against Iowa's roughly $2,707 combined. Iowa is meaningfully cheaper, and the state-figure comparison already showed that — it simply understates the margin.
Check the retirement rules if you are over 55 or approaching it. Iowa's exemption is broad enough to change a relocation decision on its own, and it is far more generous than most states' capped exclusions.
Ignore old bracket tables. Iowa's move to a flat rate is recent enough that outdated material circulates widely, and a multi-bracket Iowa calculation is simply wrong now.
10. Why a surtax-on-tax behaves differently
The structure is unusual enough that its consequences are worth drawing out, because they are not obvious and several of them favour the taxpayer.
It is automatically progressive in the same shape as the state tax. A surtax on income would apply its flat percentage to every dollar. A surtax on tax inherits whatever progressivity the underlying tax has — including the shelter from Iowa's $16,100 standard deduction. A low earner whose Iowa tax is small pays a proportionally small surtax without the district needing any brackets of its own.
It falls to zero when the state tax does. Someone whose Iowa tax is zero — a retiree over 55, or a low earner fully sheltered by the deduction — pays no surtax regardless of their district's percentage. A tax-on-income local levy would still reach them.
Every state deduction is worth more than its face value. A deduction that saves $380 of Iowa tax also saves 5% of that $380 in surtax. Small, and it means the effective value of any Iowa deduction is slightly above the headline rate.
It insulates districts from having to legislate their own base. A district sets one number — a percentage — and inherits the state's entire definition of income, deductions and exemptions. That is administratively much simpler than the alternative, which is why the structure exists.
And it makes the local burden move when the state rate moves. Iowa's phased rate reductions cut the state tax, and every district's surtax fell proportionally without any district voting on it. A local levy that shrinks automatically when the state cuts its rate is a genuinely unusual arrangement, and it is why Iowa's local layer has become smaller over time rather than larger.
11. The two mistakes, side by side
This series has now covered both ends of the same error, and they are worth putting together because the lesson generalises beyond either state.
| Maryland | Iowa | |
|---|---|---|
| Local tax base | Maryland taxable income | Iowa tax owed |
| Common wrong assumption | that it is a % of the state tax | that it is a % of income |
| Effect of the mistake | understates by ~20x | overstates by ~33x |
| Real figure on $85,000 | ≈$2,509 | ≈$129 |
Two states, two local taxes, and assuming the wrong base gets you a figure that is wrong by more than an order of magnitude in either direction.
The general instruction: before applying any local rate, find out what it multiplies. Income, tax owed, or gross earnings before deductions — all three appear in this series, and the same percentage applied to the wrong one produces a number that is not close.
Iowa's own form states its base explicitly, which is more than most jurisdictions do: "multiply line 18 by the percentage from list." Line 18 is the tax. That sentence is the whole answer, and it is on the return itself.
12. How much of the answer the state figure actually gives you
A useful way to compare states with local layers is to ask what share of the total income tax bill the state figure represents. On $85,000, using a typical local rate for each:
| State | State figure | Local | State's share of the total |
|---|---|---|---|
| Iowa | $2,578 | ≈$129 | 95% |
| Missouri (Springfield) | $3,058 | $0 | 100% |
| Indiana (2% county) | $2,478 | ≈$1,680 | 60% |
| Maryland (3.20% county) | $3,672 | ≈$2,509 | 59% |
| Kentucky (Louisville) | $2,857 | ≈$1,870 | 60% |
| Ohio (2.5% city) | $1,621 | ≈$2,100 | 44% |
Ohio is the extreme: its state figure is less than half the answer, and the state with the second-lowest headline rate in the country ends up in the middle of the pack once its cities are counted.
Iowa is at the opposite end. Its state figure is nearly the whole thing, so a national comparison table that lists only state figures treats Iowa fairly and treats Ohio very unfairly.
This is the single most useful correction to make when comparing states, and it is invisible in every ranking that quotes state rates alone. A state's position in such a table tells you as much about how it happens to divide revenue between state and local government as it does about how much it takes.
The practical instruction for anyone comparing: find each state's local share before comparing their state figures. Two states with identical state taxes can differ by thousands once the local layer is included, and the direction is not predictable from the state rate.
Frequently asked questions
What is Iowa's income tax rate? A flat 3.8% on income after a standard deduction that matches the federal $16,100. Iowa moved to a single rate after several years of phased reductions, so older bracket tables for the state are obsolete.
How much is take-home pay on $85,000 in Iowa? $66,049 for a single filer, after $9,870 federal income tax, $6,503 FICA and $2,578 Iowa tax. A school district surtax may add roughly $129 at a 5% district rate.
What is the Iowa school district surtax? A local levy computed as a percentage of the Iowa tax you owe, not of your income. It appears on Form IA 1040 line 19, and an EMS surtax adopted by some counties rides on the same line.
How do I calculate the surtax? Multiply your Iowa tax by your district's percentage. On $85,000 with $2,578 of Iowa tax, a 5% district surtax is about $129. Multiplying your salary by 5% instead would give $4,250 — over thirty times too much.
Is Iowa's local tax large? No — it is among the mildest in the country, precisely because it rides on tax rather than income. Ohio's municipal tax on the same salary is roughly $2,100 and Maryland's county tax about $2,509, against Iowa's $129.
Does Iowa tax retirement income? It exempts Social Security, and it exempts retirement income for taxpayers aged 55 and over — covering qualified plan, IRA and pension distributions. That is among the most generous treatments in the country, and a retiree's surtax is zero too, since it rides on state tax owed.
Does a 401(k) contribution reduce the surtax? Yes, automatically. Because the surtax is a percentage of your Iowa tax, anything that reduces the tax reduces the surtax proportionally — a structural bonus no other state's local tax offers.
Is Iowa cheaper than Illinois? Yes, and by more than the state figures suggest. Iowa takes about $2,707 combined at $85,000 against Illinois's $4,063, and Illinois has no local layer to add.
Is Iowa's state figure the whole answer? Nearly. At a 5% district surtax an $85,000 earner pays about $129 on top of $2,578, so the state number captures roughly 95% of the bill. That is unusual in this region — Ohio's state figure captures around 44% and Indiana's around 60%.
Why did Iowa's tax change so much recently? Iowa phased out a multi-bracket structure in favour of a single flat rate over several years. Any Iowa bracket table published a few years ago is obsolete, and a calculator still using one will produce a materially wrong figure.
What to do next
Iowa's state figure is nearly the whole answer, and the surtax is computed from your tax rather than your income — which is the one thing to get right.
- Iowa take-home pay calculator — every deduction separated, with the surtax named rather than guessed.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in Maryland — the state that makes the opposite mistake, where the local tax is on income rather than tax.
- Iowa rent affordability — what the take-home actually supports.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer taking the state's standard deduction with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; Iowa figures from this site's sourced 50-state dataset, citing Form IA 1040. District-by-district surtax percentages are not recorded in this site's dataset; the 5% used here is illustrative, and surtaxes are never included in any total. Iowa's retirement income exemption is summarised rather than computed. This is general education and not tax advice; for your own situation consult a licensed tax professional.