Iowa Ends Inheritance Tax, Cuts Retiree Income Burden With 3.8% Flat Tax
Updated
Updated · Yahoo Finance · Aug 30
Iowa Ends Inheritance Tax, Cuts Retiree Income Burden With 3.8% Flat Tax
2 articles · Updated · Yahoo Finance · Aug 30
Summary
Iowa’s retirement-tax overhaul now exempts pension, annuity and IRA income for residents over 55, after changes that began in January 2023.
A 3.8% flat income tax took effect on Jan. 1, 2025, replacing the state’s prior structure as Iowa pushed to become more retiree-friendly.
The state also eliminated its inheritance tax, reducing potential tax costs for heirs alongside the break on retirement income.
Iowa stands out among states that still levy income tax but shield key retirement income, while 42 states do not tax Social Security benefits and nine have no broad individual income tax.