Side-by-side tax comparison between Indiana (2.95% top rate, flat) and Iowa (3.8% top rate, flat). See which state lets you keep more at every salary level, and how cost of living changes the picture.
Indiana uses a flat income tax (2.95% flat + local) while Iowa has a flat system (3.8% flat). On a $100K salary, Indiana takes $2,950 in state and local taxes compared to Iowa’s $3,800 \u2014 a difference of $850.
Both states use flat brackets, but Iowa’s top rate of 3.8% is higher than Indiana’s 2.95%.
Indiana also has local income taxes (estimated at $0/year on $100K), which Iowa does not. This widens the gap beyond just state rates.
Indiana wins at 10 out of 10 salary levels tested. The advantage exists but is modest across the income spectrum.
| Salary | Indiana | Iowa | Difference | Winner |
|---|---|---|---|---|
| $40K | $33,140 | $32,800 | −$340 | Indiana |
| $50K | $40,880 | $40,455 | −$425 | Indiana |
| $60K | $48,620 | $48,110 | −$510 | Indiana |
| $75K | $59,325 | $58,688 | −$638 | Indiana |
| $100K | $76,175 | $75,325 | −$850 | Indiana |
| $120K | $89,655 | $88,635 | −$1,020 | Indiana |
| $150K | $109,326 | $108,051 | −$1,275 | Indiana |
| $200K | $142,987 | $141,287 | −$1,700 | Indiana |
| $250K | $175,889 | $173,764 | −$2,125 | Indiana |
| $300K | $206,479 | $203,929 | −$2,550 | Indiana |
Take-home pay only tells part of the story. Indiana has a cost of living index of 90 while Iowa is at 89 (national average = 100).
With similar costs of living (90 vs 89), the tax difference is the primary factor. What you see in raw take-home pay is essentially what you get in purchasing power: $84,639 in Indiana vs $84,635 in Iowa.
For a single earner at $100K filing jointly, take-home becomes $81,760 in Indiana and $80,910 in Iowa \u2014 a difference of $850. The gap remains similar regardless of filing status.
On paper, moving from Iowa to Indiana would save $850/year on a $100K salary, or $4,250 over 5 years. But relocation involves real costs: moving expenses, potentially buying/selling a home, changing jobs, and adjusting to a new community.
At $850/year, the tax difference alone likely isn’t worth relocating for. Other factors — job market, lifestyle, family — should drive the decision. The tax savings are a nice bonus if you’re already considering the move for other reasons.