The state of Iowa has made tax law changes for tax year 2025.
Federal Alignment
- Iowa will no longer have its own standard or itemized deductions, incorporating the federal standard or itemized deduction instead.
- All taxpayers must now use the same filing status on their Iowa return as their federal return.
- Married taxpayers no longer have the option to file separately on a combined return.
Tax Brackets
- For tax year 2025, Iowa has a flat tax rate of 3.8%.
Deductions/Credits
- 529 Plans: For tax year 2025 the deduction limit for contributions to an Iowa 529 plans has increased to $5,800 per beneficiary. The deduction is reported on Schedule 1, line 14.
- Enhanced Deduction for Seniors: This deduction has been added to the IA 1040. This line does not directly affect the calculation of Iowa taxable income as the deduction is already included in your federal taxable income. For Iowa purposes this deduction is considered a personal exemption that must be added back when calculating the low-income exemption, alternate tax, tax reduction; or taxable income for purposes of a health insurance deduction; and has been added to the IA 1040 for this purpose.
Further Information
For more information regarding the changes made by Iowa, please see Iowa's 2025 filing Instructions.