How Iowa Taxes Retirees (Blog)
Iowa is not a tax friendly state for retirees. Not in the worst quintile, but in the 2nd worst quintile.
Pretty high income tax with moderate income. Big marriage penalty too. 7.6% is the effective tax rate to married filing jointly. That’s a big tax, my friends.
But at least there are some exemptions for IRA and other retirement plan distributions about $12k if you’re married filing jointly.
High property tax though. And there is no real homestead exemption for seniors either.
There is a large inheritance tax too! Lineal family members receive inheritance tax free. All others…taxed. And the tax is not small either.
Iowa has a rather low sales tax though, when you factor in the state AND the localities.
Basically, income tax is pretty high. High property tax. Sales tax is moderately low. There is an inheritance tax too. Just keep that in mind as you plan your estate.
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