All-items parity
87.8
US = 100.0
Iowa (IA) | All-items parity 87.8
Iowa Cost of Living 2026
Iowa reads 87.8 on the BEA all-items price parity for 2024, the third-cheapest state in the country, with housing rents at 65.3 and a median home of $227,300. What separates Iowa from the rest of the cheap tier is the policy stack on top: a flat 3.8% income tax after one of the fastest rate-cut programs in the country, retirement income entirely exempt from age 55, and an uninsured rate of just 4.8%, among the nation's lowest. The offset is a 1.43% effective property tax that runs high for the region.
3rd-cheapest state (BEA)Retirement income tax-free at 55+Flat 3.8% income tax
Median Home
$227,300
2BR rent $1,003/mo
Median Income
$75,501
Household, Census ACS
Category breakdown
The four BEA price parities vs the nation
| Category | IA index | National avg | Difference |
|---|---|---|---|
| All items | 87.8 | 100.0 | -12.2% |
| Services: housing rents | 65.3 | 100.6 | -35.1% |
| Goods | 93.7 | 99.6 | -5.9% |
| Services: utilities | 83.3 | 98.4 | -15.3% |
| Services: other | 92.9 | 100.1 | -7.2% |
U.S. Bureau of Economic Analysis publishes these four component parities and no others. There is no federal grocery, healthcare or transportation price parity, so this table shows none. Food at home sits inside Goods; medical and transport services sit inside Services: other.
Sources: BEA Regional Price Parities by State (table SARPP), 2024 reference year, U.S. Bureau of Economic Analysis. Census ACS 2024 1-year (median income, home value), Iowa Department of Revenue (flat tax, retirement exclusion), Tax Foundation (effective property tax), EIA (electricity rates), KFF (uninsured rate).
Moving to Iowa?
The cost of the move itself belongs in the comparison. Describe your move once on Angi and get matched with local and long-distance movers to compare real quotes, free and with no obligation.
Partner link: we earn a commission if you submit a request through it. It has no effect on any figure or ranking on this site.
Pros / offsets
What works in Iowa.
From nine brackets to one flat 3.8% in five years. Iowa ran one of the most aggressive tax reforms in the country, collapsing a schedule that topped out near 8.5% in 2022 into a single 3.8% rate, among the lowest flat rates of any income-taxing state.
Retirement income is simply not taxed. Since 2023, Iowans 55 and older pay no state tax on pension, 401(k), IRA or annuity income, and Social Security was already exempt. Few states offer a cleaner retirement tax regime, and none of the others pairs it with a bottom-three price level.
Housing a teacher can buy. The $227,300 median home against a solid $75,501 median income gives Iowa one of the best price-to-income ratios anywhere; Des Moines suburbs sell new family construction in the high $200,000s.
Coverage and care that defy the cheap-state pattern. At 4.8% uninsured with 2.5 hospitals per capita, Iowa pairs low prices with near-universal coverage, the opposite of the Deep South trade-off.
Cons / drivers
Where Iowa costs more.
Property tax is the counterweight. At 1.43% effective, Iowa property taxes run well above the national middle; on the median home that is roughly $3,000 a year, and recent assessment surges have made relief a perennial legislative fight.
Winters bill you twice. A continental climate (average lows of 33 degrees) drives gas bills averaging $82 a month in the cold half of the year, and electricity at 14.02 cents per kWh is mid-pack rather than cheap.
The job market is steady, not spectacular. Insurance (Des Moines is a national insurance capital), agriculture and advanced manufacturing anchor employment, but headline tech salaries are rare; ambitious specialists often price in a move to Chicago or the Twin Cities.
Rural services are consolidating. Small-town hospitals, obstetrics units and school districts keep merging; the cheapest counties carry the longest drives to care, a pattern the statewide averages conceal.
Tax + benefit signals
Iowa tax and access overview
State income tax
3.8%
Graduated or flat
Property tax effective
1.43%
Of assessed value, annual
Sales tax (state)
6.00%
Local can add 1-4% more
Uninsured rate
4.8%
Medicaid: expanded
Your take-home pay in Iowa
Federal, Iowa and any local income tax on your salary, per paycheck.
The mortgage on a $227,300 home
Monthly payment at today’s rates with Iowa property tax (1.43%) and average home insurance.
Metro variation
State averages mask city variation.
Iowa averages 87.8 on the BEA all-items parity, and no Iowa market strays far from it:
Des Moines metro: The state's growth engine, insurance headquarters, a lively downtown and the fastest-appreciating suburbs (Waukee, Ankeny, Urbandale) where new builds run $300,000 to $400,000, still cheap for a prosperous metro.
Cedar Rapids and the Corridor: Cedar Rapids and Iowa City pair manufacturing and the University of Iowa; Iowa City carries the state's strongest rent pressure thanks to the university and hospital system.
Quad Cities and Sioux City: River-town pricing below the state median, with Illinois and Nebraska/South Dakota commuters arbitraging taxes across the bridges.
Rural Iowa: Among the cheapest functional housing in America, ordinary homes from $80,000 to $150,000 in county-seat towns, for buyers who accept the service distances.
The honest summary: Des Moines is the premium and it still undercuts almost every comparable metro in the country.
Frequently Asked
Iowa cost of living, answered
Is retirement income really tax-free in Iowa?
Yes. From tax year 2023, Iowa fully exempts retirement income, pensions, annuities, 401(k) and IRA distributions, for taxpayers 55 and older or disabled; Social Security was already untaxed. A retired couple drawing $80,000 from pensions and Social Security owes Iowa income tax on none of it. Combined with the third-cheapest price level in the country, it is one of the strongest retirement value propositions in the US, with the 1.43% property tax as the line to watch.
How did Iowa's income tax fall so fast?
The 2022 reform legislated a stepped collapse from a nine-bracket schedule topping out near 8.5% to a flat rate, accelerated by later sessions as revenue allowed, landing at 3.8% today. Corporate rates were cut in parallel under revenue triggers. It moved Iowa from one of the higher-tax states in the Midwest to one of the lowest flat rates of any income-taxing state in roughly three years.
Why is Iowa property tax so high if everything else is cheap?
Local governments and school districts rely on it heavily in a state without big-city commercial tax bases, and assessment cycles have been catching up with price growth. The 1.43% effective rate costs about $3,000 a year on the median home, real money against a $227,300 house, and the legislature keeps iterating on caps and credits. Homestead and military credits trim the bill modestly.
What does housing actually cost in Des Moines?
The metro median sits in the high $200,000s, with new suburban construction in Ankeny, Waukee and Grimes typically $300,000 to $400,000 and intown neighborhoods like Beaverdale below that. Median two-bedroom rents near $1,003 statewide run modestly higher in the metro. For a capital city with top-tier insurance-industry employment, it is among the cheapest prosperous metros in America.
How expensive are Iowa winters?
Budget for them: average lows of 33 degrees across the cold months mean natural-gas bills averaging $82 a month (concentrated November through March), snow-removal costs, and winter tires if you commute rural highways. Electricity at 14.02 cents per kWh is unexceptional. The utilities parity of 83.3 says the prices are modest; the climate simply makes you buy more of them than a Sun Belt household would.
Who is Iowa the right move for?
Three profiles do best: retirees 55+, for whom the retirement-income exemption plus bottom-three prices is close to unbeatable; families on Midwestern salaries who want ownership early (the price-to-income ratio is among the nation's best, schools and coverage are strong); and remote workers banking a coastal salary. The trade is winter and a modest ceiling on specialist career tracks; price your own scenario in the /calculator.