Iowa Capital Gains Tax: 2026 Rules and Calculator

Short answer: Iowa taxes capital gains as ordinary income at a flat 3.8% (Iowa Code 422.5A, tax years 2025 and later). On top of that comes federal capital gains tax (0%, 15% or 20% for 2026 under IRS Rev. Proc. 2025-32, and up to 25% on building depreciation) and the 3.8% net investment income tax above $250,000 of income for married couples or $200,000 single (IRC 1411).

Iowa capital gains tax calculator

Enter your sale: rental property, your home, land, a business, stock or collectibles. You get the 2026 tax in Iowa (federal, the 3.8% tax and Iowa tax) and the same sale spread over the years the buyer pays you. It runs in your browser on the same engine as our capital gains tax calculator.

Example loaded. Change any number to run yours.

What you are sellingRental or investment real estateYour home (Section 121 exclusion)LandA business you work inPublicly traded stock or fundsCollectibles (art, coins, gold, cars)

Sale price

Selling costs (commission, title, legal)

Your adjusted basis

What you paid plus improvements, minus depreciation or depletion taken. Inherited: the value at the date of death.

Depreciation taken on the building

How long you have held itMore than 1 year1 year or less

State you will be taxed inAlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

Filing statusMarried filing jointlySingleHead of household

Other income this year (before deductions)

Years the buyer pays you over (1 = all now)

Expected sale date

Iowa taxes capital gains as ordinary income at a flat 3.8% (Iowa Code 422.5A, tax years 2025 and later). Tick the Iowa box in the calculator for farmland you farmed and held 10 years or more and it applies the Iowa subtraction. Source: Iowa Code 2026, section 422.7 (capital gain subtractions); Iowa Code 2026, section 422.5A (rate), checked October 13, 2026. Federal: 2026 brackets per IRS Rev. Proc. 2025-32 (0%, 15% and 20% on long-term gain; 20% above $613,700 of taxable income married filing jointly); 25% cap on building depreciation, IRC 1(h)(1)(E); 28% cap on collectibles, IRC 1(h)(4); 3.8% net investment income tax above $250,000 married or $200,000 single, IRC 1411.

Estimated tax on this sale (2026), example in Iowa

$167,277

You keep $866,723 after selling costs and tax. The tax is 24.5% of your gain.

Your gain

• Sale price less selling costs$1,034,000
• Less your basis$350,000
• Your taxable gain$684,000
• Depreciation, taxed at up to 25%$150,000
• Long-term gain at 0%, 15% or 20%$534,000

The tax, line by line

• Federal income tax$120,233
• Net investment income tax (3.8%)$21,052
• Iowa tax$25,992
• Total tax$167,277
• You keep$866,723

All in one year vs spread over 8 years: tax of $167,277 against $126,502 when the buyer pays you over 8 years. You keep $40,775 more.

Get the REAL numbers

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These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.

Why now: the closing date and how the buyer pays you are set before closing, and they decide how much Iowa and federal tax this sale costs.

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This is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.

How Iowa taxes capital gains in 2026

Iowa taxes capital gains as ordinary income at a flat 3.8% (Iowa Code 422.5A, tax years 2025 and later).

• Net capital gain from real property used in a farming business is subtracted when you materially participated in farming for at least ten years and held the land at least ten years (Iowa Code 422.7); retired farmers have further subtractions for breeding livestock.

Selling Iowa property while living elsewhere: Iowa taxes a nonresident on gain from real estate and other property located in Iowa, so selling Iowa property from another state still means a Iowa return.

Worked example (computed October 13, 2026)

A rental sale in Iowa, which gets no farm subtraction, at the flat 3.8%. A married couple filing jointly in Iowa sells a rental property for $1,100,000 with $66,000 of selling costs. Basis is $350,000 after $150,000 of depreciation, and other income is $120,000.

• Taxable gain: $684,000, of which $150,000 is depreciation taxed at up to 25%.
• All in one year (2026): $120,233 federal income tax, $21,052 net investment income tax and $25,992 Iowa tax (3.8% of the gain): $167,277 in total, 24.5% of the gain.
• Spread over 8 years on a note: $126,502 of tax on the gain, so the seller keeps $40,775 more. Interest on the note is taxed separately.

What the calculator simplifies

Tick the Iowa box in the calculator for farmland you farmed and held 10 years or more and it applies the Iowa subtraction. It also leaves out local taxes unless named above, the alternative minimum tax effect of note interest, and equipment recapture on a business sale. Federal tables for later years carry the 2026 tables forward.

Spreading a Iowa sale over several years

On an installment sale the gain is reported as the buyer pays you (IRC 453), so each year's slice can stay in lower federal brackets and under the 3.8% threshold. Building depreciation is reported first (Treas. Reg. 1.453-12), equipment recapture is taxed in the year of sale (IRC 453(i)), and notes over $5,000,000 owe the Section 453A interest charge. More on how it works: what a structured installment sale is.

Sources

• Iowa Code 2026, section 422.7 (capital gain subtractions)
• Iowa Code 2026, section 422.5A (rate)
• IRS Rev. Proc. 2025-32: 2026 federal brackets.
• IRC 1(h) and IRC 1411: capital gain rates and the 3.8% tax (as in force October 2026).

Frequently asked

What is the capital gains tax rate in Iowa for 2026?

Iowa taxes capital gains as ordinary income at a flat 3.8% (Iowa Code 422.5A, tax years 2025 and later). Federal capital gains tax and the 3.8% net investment income tax come on top.

How much tax on a $1,100,000 sale in Iowa?

In the example on this page, a married couple filing jointly selling a rental property for $1,100,000 with a $684,000 taxable gain owes $167,277 in 2026: $120,233 federal, $21,052 net investment income tax and $25,992 Iowa tax. Spread over 8 years, the tax is $126,502.

Do nonresidents pay Iowa tax when they sell property there?

Iowa taxes a nonresident on gain from real estate and other property located in Iowa, so selling Iowa property from another state still means a Iowa return.

Does Iowa have a capital gains deduction or special rule?

Net capital gain from real property used in a farming business is subtracted when you materially participated in farming for at least ten years and held the land at least ten years (Iowa Code 422.7); retired farmers have further subtractions for breeding livestock