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Capital Gains Tax in Iowa
By Priya Raman
Iowa's rate sits close to the national middle, and the math still stings.
Iowa's rate sits close to the national middle, and the math still stings.
Iowa taxes capital gains at up to 5.7% at the state level. Add the federal 20% and the 3.8% NIIT and a seller at the top bracket can owe up to 29.5% of the gain.
That 29.5% ceiling applies to the taxable gain, not the full sale price, with depreciation recapture calculated on top through the capital gains tax calculator.
Say an Iowa investor nets a $250,000 gain on a rental sale. The 29.5% combined rate turns that into a tax bill near $73,750, not counting whatever depreciation recapture adds.
A 1031 exchange pushes that $73,750 down the road rather than off the table, as long as the proceeds land in a qualifying replacement property. Check the specifics in the 1031 exchange calculator and pin down your deadlines with the timeline calculator.