Does Iowa have a special capital gains tax rate?

No. Iowa taxes capital gains as ordinary income at its flat 3.8% rate for 2025, with no separate preferential rate. Specific exclusions exist for certain qualified farm or business sales, but for ordinary investments the full gain is taxed at 3.8%.

How are long-term capital gains taxed federally?

Long-term gains on assets held over one year are taxed at 0%, 15%, or 20% depending on your taxable income. The gain stacks on top of your other income, so part can fall in the 0% band and the rest in higher bands.

How are short-term capital gains taxed?

Short-term gains, on assets held one year or less, are taxed as ordinary income at your federal marginal rate (10% to 37%) and at Iowa's flat 3.8%. There is no preferential rate for short-term gains at either level.

What is the Net Investment Income Tax?

The NIIT is an extra federal 3.8% tax on investment income for higher earners, applying when modified AGI exceeds $200,000 single or $250,000 joint. The tool adds it to the lesser of your gain or the amount over the threshold.

Does this include regular federal income tax?

It covers the federal capital gains tax on the gain plus NIIT and the Iowa tax on that gain. Your regular federal income tax on wages and other income is separate and not included here.

Iowa Capital Gains Tax Calculator

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Selling an investment in Iowa triggers tax at two levels: the federal capital gains tax, which depends on how long you held the asset, and Iowa’s state income tax. This calculator estimates both and totals the bite on your gain.

How it works

Federal treatment depends on the holding period. Long-term gains stack on your other taxable income across the 0/15/20 percent bands:

Long-term: 0% up to the 0% top, 15% up to the 15% top, 20% above
Short-term: gain × your ordinary federal marginal rate
NIIT: 3.8% × min(gain, MAGI − threshold)
Iowa: gain × 3.8% (taxed as ordinary income, no preferential rate)

Iowa has no separate capital-gains rate, so the entire gain is taxed at the 2025 flat rate of 3.8 percent, stacked on the rest of your income.

Example

A $20,000 long-term gain on top of $80,000 of other income falls in the federal 15 percent band, producing $3,000 of federal tax. Iowa adds 3.8 percent of $20,000, or $760. Total state plus federal tax on the gain is about $3,760 before any NIIT.

Notes

This estimate excludes your regular federal income tax on wages. Iowa offers narrow exclusions for certain qualified farm and business sales that are not modeled here. Always confirm current federal thresholds and the Iowa rate at irs.gov and tax.iowa.gov.