2026 tax year · Iowa

RSU tax in Iowa

A $60,000 vest costs $2,280 in Iowa tax on top of the federal bill. And the federal share withheld is $2,970 short.

What a $60,000 vest actually costs in Iowa

A single filer already earning $180,000 in salary. The vest stacks on top of that, so it fills the highest brackets rather than starting at the bottom:

Withheld by your employer at 22.0%$13,200
Federal tax the vest actually costs$16,170
Federal shortfall, owed in April$2,970
Iowa income tax on the vest$2,280
Total still to find$5,250

The withholding rate is flat, 22.0% below $1 million of supplemental pay. And takes no account of your salary. That is why the gap grows the more you earn.

The gap widens with salary

SalaryWithheldActually owedShortfallIowa tax
$90,000 $13,200 $13,764 $564 $2,280
$160,000 $13,200 $14,570 $1,370 $2,280
$260,000 $13,200 $20,630 $7,430 $2,280

How Iowa treats a vest

Iowa taxes a vest as ordinary income like any other wages, adding $2,280 on top of the federal bill for $60,000 of vesting stock.

If you moved during the vesting period, the income is split between the states you worked in across it: Days worked in each state / total days in vesting period x RSU income = each state's allocation That is worked out day by day, not by where you lived on the vesting date.

What the same vest costs around Iowa

Total income of $240,000 in the states Iowa borders:

StateIts taxvs Iowa
South Dakota No income tax −$9,120
Nebraska $10,619 +$1,499
Missouri $11,350 +$2,230
Illinois $11,880 +$2,760
Wisconsin $12,333 +$3,213
Minnesota $18,121 +$9,001

RSU questions in Iowa

Should I sell at vest?

Selling immediately raises the cash for the $5,250 you still owe and leaves no capital gain, because the sale price equals the price you were already taxed on. Holding turns it into an investment decision, any further gain is a capital gain, and any fall is a loss you take on shares you were already taxed on at the higher value.

I moved to Iowa mid-vest, who taxes it?

Both states, split by workdays. The income is allocated across the vesting period, not assigned to wherever you happened to live on the vesting date. The state you left can still claim its share, and California, New York and Massachusetts pursue it hardest.

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