Financial planning in Iowa
A flat 3.8% that retirement income never reaches: pensions, IRAs and Roth conversions are exempt from 55.
Direct answer
Iowa moved to a single 3.8% income tax rate in 2025 and, since 2023, excludes retirement income entirely for taxpayers 55 and older: pensions, IRA and 401(k) distributions and, by the Department of Revenue's own list, Roth-conversion income, with no dollar cap. Social Security is not taxed, the inheritance tax is gone for deaths from 2025, and there is no estate tax. For a Des Moines household the planning is unusual: a Roth conversion at 55 or later costs federal tax only, so the state layer drops out of the decision in the year you turn 55.
Iowa tax treatment
Figures are for tax year 2026, each read from the source beside it. Thresholds and rates are revised regularly; confirm the current year before acting on any of them. What these rules change in a household’s plan, from the order accounts are drawn to the timing of Roth conversions, is set out in the retirement tax planning overview.
Senate File 2442 (2024) replaced Iowa's brackets with a single 3.8% rate from tax year 2025, and the Department of Revenue's October 2025 release confirms the same rate applies to all taxable income in 2026, with no further reduction scheduled.
For tax years from 2023, retirement income is excluded from Iowa taxable income for taxpayers who are 55 or older on December 31, disabled, or a surviving spouse. The Department's qualifying list includes traditional and Roth IRA distributions, 401(k) and pension income including IPERS, and Roth-conversion income, with no dollar limit. Social Security benefits are not taxed.
Senate File 619 (2021) phased out Iowa's inheritance tax, which no longer applies to deaths on or after January 1, 2025. Iowa has had no separate estate tax since 2005. Only the federal exclusion applies.
Worth doing here
Things that are worth doing in Iowa that would not be worth doing, or would work differently, somewhere else.
Because Roth-conversion income is on the Department's list of excluded retirement income, an Iowa resident who is 55 or older on December 31 of the conversion year pays no Iowa tax on the conversion, however large. Someone under 55 pays 3.8% on it, so a household approaching 55 has a reason to schedule conversions into the year of the birthday or later.
Each Iowa taxpayer may deduct contributions of up to $5,800 per beneficiary for 2025 to ISave 529 or the IAdvisor 529 plan, so a couple can deduct up to $11,600 per child or grandchild. Contributions made up to the Iowa filing deadline count for the prior year. The limit is indexed; the 2026 figure had not been published when this was written.
A retired farmer who is 55 or older, has materially participated in farming for ten years and has held the land for ten years may elect to exclude farm lease income from Iowa tax, and a separate election excludes capital gain on the sale of farm real property. Both are elections with conditions and interact with the general retirement exclusion.
Federal and state, together
At 3.8% the state layer is small for working households and disappears for retirees over 55, so the federal deduction cap rarely binds and the plan is almost entirely federal: brackets, Medicare tiers and the taxation of Social Security.
The federal deduction for state and local taxes is $40,400 for tax year 2026 and begins to shrink above $500,000 of modified adjusted gross income, down to a floor of $10,000, and is scheduled to return to $10,000 after 2029. The federal estate tax exclusion is $15,000,000 per person for deaths in 2026. IRS, Instructions for Schedule A (2025), line 5e; IRS, tax year 2026 inflation adjustments (Rev. Proc. 2025-32).
Cities
Each city page covers what is local — how households there tend to be paid, what the first meeting usually covers — and inherits this state layer.
Des Moines is an insurance and financial-services capital, home to Principal Financial Group's headquarters and large operations of Wells Fargo and Nationwide, alongside the Hy-Vee and Casey's headquarters, John Deere's Ankeny works and state government.
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Common questions
Not for taxpayers who are 55 or older on December 31 of the year, disabled, or surviving spouses. Pensions, IRA and 401(k) distributions and Roth-conversion income are all excluded, with no dollar cap. Social Security is not taxed at any age.
Not for taxpayers 55 or older at year-end, because the Department of Revenue lists Roth-conversion income among excluded retirement income. Under 55, the converted amount is taxed at the flat 3.8%.
No. The inheritance tax does not apply to deaths on or after January 1, 2025, and Iowa has had no estate tax since 2005.
No. Flames Financial Planning is based in Minnetonka, Minnesota, and serves Iowa households through a virtual planning relationship. This page describes the service area and does not claim a Iowa office.
Yes. State tax treatment shapes withdrawal order, Roth-conversion timing, and where investments are best held. Planning includes tax guidance and review of a completed return; Premier adds tax projections and preparation and filing through an independent tax partner.
Next step
A discovery meeting covers your situation, what you pay now, and whether a fixed quarterly membership is a better fit.
