Iowa Bonus Tax Calculator 2026
Iowa requires 3.8% state withholding on a bonus whenever federal tax on it is withheld at the flat rate.
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3.8%, and it follows the federal choice
The Department of Revenue's withholding information page puts Iowa's supplemental rule this way: "If federal income tax is withheld on a flat rate basis, Iowa income tax is required to be withheld at the highest rate applicable to individuals (3.8%)." If the bonus is instead included with regular wages, "the two are combined and the withholding tables or formulas are used" (Iowa Administrative Code rule 701—307.2(1)"c"). For a $5,000 bonus with federal at 22%, Iowa takes $190.00; for $20,000, $760.00.
The 2026 formula gives the same marginal rate
Iowa's withholding formula effective January 1, 2026 is itself a flat rate: subtract the per-period deduction for the IA W-4 marital status, multiply by 3.80%, then subtract the allowance amount spread over the year. Once regular pay exceeds the deduction, every extra dollar — including a bonus combined with a paycheck — is withheld at 3.80%. That is why switching the federal method changes the federal line ($1,166.31 instead of $1,100.00) but leaves Iowa's at $190.00.
Update your IA W-4
Iowa rewrote its W-4 for 2024 and updated it again for 2026 for new standard and itemized deduction rules. Employees whose IA W-4 dates to 2023 or earlier are still withheld using an older allowance conversion, which affects regular paychecks rather than a flat 3.8% bonus.
| Rule | 3.8% when federal tax is withheld at a flat rate |
|---|---|
| Valid through | December 31, 2026 |
| Documents | Iowa Withholding Tax Information (Supplemental Wages) and Iowa Withholding Formula effective January 1, 2026 (Formula released November 2025) |
| Agency | Iowa Department of Revenue |
| Federal income tax | −$1,100.00 |
| Social Security | −$310.00 |
| Medicare | −$72.50 |
| Iowa income tax | −$190.00 |
| Net | $3,327.50 |