Iowa
IA · state · 17 cited facts
| Category | Provision | Value | Source |
|---|---|---|---|
| trust-nexus | Incomplete-gift nongrantor trust / ING (income tax reach) | ESCAPES: situs follows the trustees and the principal office of administration; the non-trustee grantor's residence is expressly NOT controlling, and foreign-situs trusts are taxed on IA-source income only (intangible gain excluded). PERMANENT, not deferral: no throwback statute, and the retained gain is corpus gain outside DNI (IRC 643(a)(3)), so it never carries out to the settlor on a later distribution. Ongoing income on the reinvested proceeds IS taxable to a resident beneficiary when distributed | sources (3)Iowa Admin. Code r. 701-700.3(2) (situs of inter vivos trusts); Iowa Code 422.6 · high confidence · as of 2026-07-13 · TY 2026 Iowa expressly excludes a non-trustee grantor's residence and the beneficiaries' residence from trust situs The residence of the grantor of a trust, not subject to the grantor trust rules under 26 U.S.C. Sections 671 to 679, is not a controlling factor as to the situs of the trust, unless the person is also a trustee. Note: 701-700.3(2) also makes the beneficiaries' residence irrelevant; 701-700.8(4) excludes intangible income from Iowa-source for foreign-situs trusts unless derived from an Iowa business. https://www.legis.iowa.gov/docs/iac/chapter/01-07-2026.701.700.pdfIRC §643(a)(3) · high confidence · as of 2026-07-13 · TY 2026 IRC §643(a)(3): capital gain allocated to corpus is excluded from distributable net income Gains from the sale or exchange of capital assets shall be excluded to the extent that such gains are allocated to corpus and are not (A) paid, credited, or required to be distributed to any beneficiary during the taxable year, or (B) paid, permanently set aside, or to be used for the purposes specified in section 642(c). Note: This is the rule that makes an ING's escape PERMANENT rather than deferral. Income reaches a beneficiary only through DNI (IRC 652/662); a retained corpus gain is outside DNI, so a later distribution of it is principal, not income, and never enters the beneficiary's federal taxable income. Every escape state starts from the federal number, so it never enters the state base either. Conditional on the gain ACTUALLY being allocated to corpus and not distributed in the year realized: a gain routed to fiduciary accounting income, or distributed in the sale year, is in DNI and is taxable to the resident beneficiary. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section643&num=0&edition=prelimIRC §665(c) · high confidence · as of 2026-07-13 · TY 2026 IRC §665(c): the accumulation-distribution (throwback) rules do not reach a qualified domestic trust (1) In general In the case of a qualified trust, any distribution in any taxable year beginning after the date of the enactment of this subsection shall be computed without regard to any undistributed net income. (2) Qualified trust For purposes of this subsection, the term 'qualified trust' means any trust other than- (A) a foreign trust (or, except as provided in regulations, a domestic trust which at any time was a foreign trust), or (B) a trust created before March 1, 1984, unless it is established that the trust would not be aggregated with other trusts under section 643(f) if such section applied to such trust. Note: A modern NV/DE ING is a 'qualified trust', so the federal accumulation-distribution regime is computed without regard to undistributed net income: it is empty. States whose only accumulation rule piggybacks IRC 665-668 (OR OAR 150-316-0575, IA, KS, SC) therefore recapture nothing. Only a state with its OWN throwback keyed to income untaxed by any state can claw the gain back, and of the verified escape states only Utah has one (59-10-114(1)(g)). https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section665&num=0&edition=prelim |
| estate-none | Estate and inheritance tax | None | sources (1)Iowa DOR, Introduction to Iowa Inheritance Tax · high confidence · as of 2026-07-02 · TY 2025 Iowa inheritance tax not applicable for deaths on or after Jan 1, 2025 Iowa inheritance tax is not applicable for deaths occurring on or after 1/1/25. Note: Page states the repeal date but cites no session law; SF 619 (2021) attribution from the prior survey, unverified against a live source. https://revenue.iowa.gov/taxes/tax-guidance/inheritance-tax/introduction-iowa-inheritance-tax |
| rate | Top income tax rate (TY2025) | 3.8% flat on federal taxable income (+ school district surtax 0% to 20% of tax, multiplicative) | sources (1)Iowa Department of Revenue, Individual Income Tax · medium confidence · as of 2026-06-10 · TY 2025 Iowa income tax rate is 3.8% flat on Iowa taxable income (= federal taxable income) A tax is imposed upon the Iowa taxable income of every individual at the rate of 3.8 percent for tax years beginning on or after January 1, 2025. Note: Iowa taxable income starts from federal taxable income (Iowa Code §422.7), so the federal standard deduction shelters the first ~$30,000 of gains for MFJ filers. An additive school district surtax (0% to 20% of Iowa tax, multiplicative) applies in ~87% of districts; modal rate is 5% to 10%. Narrow farmer/employee-stock exclusions are election-gated and immaterial to portfolio capital gains. https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax |
| rate | Top income tax rate (TY2024) | 5.70% top bracket, graduated (Iowa moved to flat 3.8% in TY2025) | sources (1)Iowa Code §422.5A (TY2024) · medium confidence · as of 2026-06-21 · TY 2024 Iowa income tax top rate is 5.70% for TY2024 (income over $30,000, single filers) Over $30,000: the rate of 5.70 percent. Note: URL resolves to the Iowa Code Chapter 422 section listing; §422.7(2) is within this chapter. TY2024 graduated top rate; Iowa moved to a flat 3.8% on federal taxable income in TY2025 per Iowa Code §422.5. Iowa Code §422.5A governed the graduated rate schedule through TY2024. https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=422&session=90 |
| conformity | Loss carryforward | Conforms to IRC §1212 indefinite federal carryforward applies | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| muni-instate | In-state muni bond interest | Taxable: (standard) Iowa Code §422.7(2) adds back Iowa bond interest; specific program bonds in §422.7(2)(a)-(u) are exempt but standard Iowa GOs are taxable | sources (1)Iowa Code §422.7(2) · medium confidence · as of 2026-06-18 · TY 2025 Iowa taxes both in-state (standard) and out-of-state muni bond interest via §422.7(2) add-back Add interest and dividends from foreign securities and from securities of state and other political subdivisions exempt from federal income tax under the Internal Revenue Code, except for those securities the interest and dividends from which are exempt from taxation by the state of Iowa as otherwise provided by law. Note: URL resolves to the Iowa Code Chapter 422 section listing; §422.7(2) is within this chapter. Iowa §422.7(2) adds back all muni interest excluded from federal gross income under IRC §103. Specific Iowa program bonds listed in §422.7(2)(a)-(u) (school infrastructure, Board of Regents, urban renewal, etc.) are exempt from the add-back. Standard Iowa general obligation bonds and ALL out-of-state bonds are taxable. Iowa is in the same 'both-taxable' category as IL and WI, with a narrow list of Iowa program bond exceptions. https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=422&session=91 |
| muni-outstate | Out-of-state muni bond interest | Taxable: Iowa Code §422.7(2) requires add-back; no Iowa exemption for out-of-state bonds | sources (1)Iowa Code §422.7(2) · medium confidence · as of 2026-06-18 · TY 2025 Iowa taxes both in-state (standard) and out-of-state muni bond interest via §422.7(2) add-back Add interest and dividends from foreign securities and from securities of state and other political subdivisions exempt from federal income tax under the Internal Revenue Code, except for those securities the interest and dividends from which are exempt from taxation by the state of Iowa as otherwise provided by law. Note: URL resolves to the Iowa Code Chapter 422 section listing; §422.7(2) is within this chapter. Iowa §422.7(2) adds back all muni interest excluded from federal gross income under IRC §103. Specific Iowa program bonds listed in §422.7(2)(a)-(u) (school infrastructure, Board of Regents, urban renewal, etc.) are exempt from the add-back. Standard Iowa general obligation bonds and ALL out-of-state bonds are taxable. Iowa is in the same 'both-taxable' category as IL and WI, with a narrow list of Iowa program bond exceptions. https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=422&session=91 |
| qoz-conformity | QOZ conformity (IRC §1400Z-2) | Conforms to IRC §1400Z-2 QOZ gain deferral and 10-year exclusion via rolling IRC conformity | sources (1)Iowa Code §422.3 · medium confidence · as of 2026-06-19 · TY 2025 Iowa conforms to IRC §1400Z-2 QOZ gain deferral and exclusion The taxes imposed by this division shall be computed on the basis of federal taxable income as defined in the Internal Revenue Code of 1986, as amended to and including the date of enactment of the Internal Revenue Code provision being referred to, with the modifications specified in this division. Note: URL resolves to the Iowa Code Chapter 422 section listing; §422.7(2) is within this chapter. Iowa rolling IRC conformity (§422.3) incorporates §1400Z-2 without modification. https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=422&session=90 |
| qsbs-conformity | QSBS conformity (IRC §1202) | Conforms to IRC §1202 QSBS gain exclusion via rolling IRC conformity; no addback | sources (1)Iowa Code §422.7 (net income); §422.3(5)(b) (Internal Revenue Code definition) · high confidence · as of 2026-07-12 · TY 2025 Iowa conforms to IRC §1202: net income starts from federal taxable income under a rolling IRC (2020+), and §422.7 contains no §1202 addback The term "net income" means the taxable income as properly computed for federal income tax purposes under section 63 of the Internal Revenue Code, with the following adjustments: Note: Iowa Code §422.3(5)(b) verbatim: 'For tax years beginning on or after January 1, 2020, "Internal Revenue Code" means the Internal Revenue Code of 1954, prior to the date of its redesignation as the Internal Revenue Code of 1986 by the Tax Reform Act of 1986, or means the Internal Revenue Code of 1986, as amended.' A live scan of the §422.7 adjustment list finds zero references to section 1202, so the rolling conformity carries the exclusion, including OBBBA's post-July 4, 2025 enhancements, into the Iowa base. https://www.legis.iowa.gov/docs/code/422.7.pdf |
| agency-obligations | GSE bond interest (FNMA/FHLMC) | Taxable: Iowa starts from federal taxable income; FNMA/FHLMC interest is in that base (not IRC §103-excluded); Iowa Code §422.7(2) add-back applies only to excluded muni interest; no Iowa subtraction available for FNMA/FHLMC | sources (1)Iowa Code §422.7; Iowa Code §422.5 · medium confidence · as of 2026-06-20 · TY 2025 Iowa taxes FNMA and FHLMC bond interest: Iowa starts from federal taxable income, which includes FNMA/FHLMC interest; the §422.7(2) add-back only applies to IRC §103-excluded muni interest Iowa taxable income of individuals is the individual's taxable income computed under the Internal Revenue Code, with the modifications provided in this section. Note: URL resolves to the Iowa Code Chapter 422 section listing; §422.7(2) is within this chapter. Iowa starts from federal taxable income (not AGI). FNMA and FHLMC bond interest is INCLUDED in federal taxable income; it is not IRC §103-excluded muni interest. The §422.7(2) add-back applies only to IRC §103-excluded obligations; FNMA/FHLMC interest is in the base. Iowa Code §422.7 contains no subtraction for FNMA/FHLMC interest. Secondary clause (§422.7(2)): 'Add interest and dividends from foreign securities and from securities of state and other political subdivisions exempt from federal income tax under the Internal Revenue Code.' https://www.legis.iowa.gov/law/iowaCode/sections?codeChapter=422&session=91 |
| dividend-qualified | Qualified dividend income | Ordinary rate: Iowa has no modification creating a preferential rate for qualified dividends; taxed at the flat 3.8% rate on federal taxable income (IRC §1(h)(11) preference not adopted) | sources (1)Iowa Department of Revenue, Individual Income Tax · medium confidence · as of 2026-06-10 · TY 2025 Iowa income tax rate is 3.8% flat on Iowa taxable income (= federal taxable income) A tax is imposed upon the Iowa taxable income of every individual at the rate of 3.8 percent for tax years beginning on or after January 1, 2025. Note: Iowa taxable income starts from federal taxable income (Iowa Code §422.7), so the federal standard deduction shelters the first ~$30,000 of gains for MFJ filers. An additive school district surtax (0% to 20% of Iowa tax, multiplicative) applies in ~87% of districts; modal rate is 5% to 10%. Narrow farmer/employee-stock exclusions are election-gated and immaterial to portfolio capital gains. https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax |
| treasury | U.S. Treasury interest | Exempt: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations (T-bills, T-notes, T-bonds, TIPS, I-bonds) | sources (1)31 U.S.C. §3124(a) · high confidence · as of 2026-06-20 · TY 2025 U.S. Treasury interest exempt from Iowa income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax. Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3124 |
| fhlb-ffcb | FHLB and FFCB bond interest | Exempt: 12 U.S.C. §1433 (Federal Home Loan Bank Act) and 12 U.S.C. §2023 (Farm Credit Act) mandate state tax exemption for FHLB and FFCB securities | sources (2)12 U.S.C. §1433 (Federal Home Loan Bank Act) · high confidence · as of 2026-06-20 · TY 2025 FHLB and FFCB bond interest exempt from Iowa income tax: federal enabling statutes mandate state tax exemption Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority. Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1433&num=0&edition=prelim12 U.S.C. §2023 (Farm Credit Act) · high confidence · as of 2026-06-20 · TY 2025 Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124). Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2023&num=0&edition=prelim |
| carryback | Capital loss carryback | None: IRC §1212(b) provides carryforward only for non-corporate taxpayers; no carryback to prior years | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| character | Long-term capital gains treatment | Ordinary rate: no preferential long-term rate; capital gains taxed as ordinary income at the flat 3.8% rate (Iowa Code §422.5A) | sources (1)Iowa Department of Revenue, Individual Income Tax · medium confidence · as of 2026-06-10 · TY 2025 Iowa income tax rate is 3.8% flat on Iowa taxable income (= federal taxable income) A tax is imposed upon the Iowa taxable income of every individual at the rate of 3.8 percent for tax years beginning on or after January 1, 2025. Note: Iowa taxable income starts from federal taxable income (Iowa Code §422.7), so the federal standard deduction shelters the first ~$30,000 of gains for MFJ filers. An additive school district surtax (0% to 20% of Iowa tax, multiplicative) applies in ~87% of districts; modal rate is 5% to 10%. Narrow farmer/employee-stock exclusions are election-gated and immaterial to portfolio capital gains. https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax |
| filing-status-flat | Filing status irrelevant: flat rate state | Yes: flat 3.8% rate on taxable income regardless of filing status (Iowa Code §422.5A; graduated brackets repealed effective TY2025) | sources (1)Iowa Department of Revenue, Individual Income Tax · medium confidence · as of 2026-06-10 · TY 2025 Iowa income tax rate is 3.8% flat on Iowa taxable income (= federal taxable income) A tax is imposed upon the Iowa taxable income of every individual at the rate of 3.8 percent for tax years beginning on or after January 1, 2025. Note: Iowa taxable income starts from federal taxable income (Iowa Code §422.7), so the federal standard deduction shelters the first ~$30,000 of gains for MFJ filers. An additive school district surtax (0% to 20% of Iowa tax, multiplicative) applies in ~87% of districts; modal rate is 5% to 10%. Narrow farmer/employee-stock exclusions are election-gated and immaterial to portfolio capital gains. https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax |
| migration-loss-conformity | Migration loss carryforward conformity | Full conform (structural inference): Iowa computes its income tax from the federal base, so an imported federal section 1212 capital-loss carryforward flows through to offset post-residency gains; no published guidance addresses the imported pre-residency carryforward. | sources (1)Iowa Department of Revenue, Individual Income Tax · medium confidence · as of 2026-07-03 · TY 2025 Iowa conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference Enter your federal taxable income as reported on federal 1040, line 15. Note: The 2025 IA 1040 expanded instructions (Line 2) start Iowa income from federal taxable income (federal 1040 line 15), so the federal section 1212 capital-loss carryover flows through. Quote verbatim from the live Iowa DOR guidance page. No published guidance addresses the imported pre-residency carryforward, so that application remains a structural inference. https://revenue.iowa.gov/taxes/tax-guidance/individual-income-tax/1040-expanded-instructions/federal-taxable-income |