Iowa uses a flat state income tax of 3.8% in 2026 — the same rate applies to every dollar of taxable income, which makes your paycheck easy to predict. On a $75,000 salary, a single filer pays about $2,850 in state tax and takes home roughly $58,743 a year (about 78.3% of gross) after federal, state, and FICA withholding.

Iowa's 3.8% rate is below the 4.8% average among states that tax wage income. Because the rate is flat, a raise never pushes part of your income into a higher state bracket — every extra dollar is taxed at the same 3.8%, unlike the federal system where higher earnings hit progressively higher brackets.

Remember that FICA is separate from income tax and is not affected by your state. Every worker pays 6.2% for Social Security on the first $184,500 of wages (the 2026 wage base) plus 1.45% for Medicare on all wages. Pre-tax 401(k) and HSA contributions lower your federal and state income tax but do not reduce FICA — a detail that trips up a lot of first-time budgeters.

Iowa completed one of the most dramatic tax overhauls in the country, collapsing what was once a nine-bracket system with a top rate near 9% into a single flat rate — and it got there ahead of the original schedule. Retirees got an even bigger win: Iowa no longer taxes most retirement income, including 401(k) and IRA distributions, making it suddenly competitive with traditional retirement havens.