2026 tax year · Iowa
Marketplace seller taxes in Iowa
Etsy, eBay, Shopify and the rest report your gross and withhold nothing. The gap between that and what you are taxed on is your costs, in Iowa that gap is worth $6,883 in tax.
Take a driver who grossed $45,000 over 18,000 business miles. After mileage at 74.3 cents and the rest of the stack, worked through on the marketplace seller page $26,775 comes off and $18,225 is left as taxable profit. That profit is what Iowa and the IRS charge against.
What that leaves you owing in Iowa
Iowa taxes income at a flat 3.8% for 2026, applied on top of federal income tax and self-employment tax.
| Self-employment tax | $2,575 |
| Federal income tax | $67 |
| Iowa income tax | $644 |
| Total tax | $3,286 |
| Effective rate on gross | 7.3% |
Earning more in Iowa
A single filer taking the standard deduction, this work as the only income, the calculator above handles the other filing statuses. Miles rise with earnings, so the deduction rises too, and the effective rate on gross climbs more slowly than it would for someone whose income grew without expenses attached:
| Volume | Gross | Mileage off | Taxable profit | Iowa tax | Total tax | Rate on gross |
|---|---|---|---|---|---|---|
| Part-time | $15,000 | $0 | $15,000 | $530 | $2,649 | 17.7% |
| Steady side income | $45,000 | $0 | $45,000 | $1,589 | $10,169 | 22.6% |
| Full-time | $72,000 | $0 | $72,000 | $2,543 | $17,346 | 24.1% |
Selling into and out of Iowa
Income tax follows you: Iowa taxes your profit wherever the buyer was. Sales tax does not. Marketplace facilitator laws make the platform collect and remit sales tax on your behalf in most states, which is why a seller can have customers in all fifty and still file only one income tax return. Selling off-platform is where that stops being true.
On $18,225 of profit, what the states around Iowa would charge:
| State | Its tax | vs Iowa |
|---|---|---|
| South Dakota | No income tax | −$693 |
| Nebraska | $596 | −$96 |
| Wisconsin | $673 | −$20 |
| Missouri | $705 | +$12 |
| Illinois | $902 | +$210 |
| Minnesota | $975 | +$282 |
- South Dakota has no income tax at all, so the same work done there costs $693 less in state tax than it does in Iowa.
- Nebraska would take $96 less, $596 against Iowa's $693.
- Wisconsin would take $20 less, $673 against Iowa's $693.
- Missouri would take $12 more, $705 against Iowa's $693.
- Illinois would take $210 more, $902 against Iowa's $693.
- Minnesota would take $282 more, $975 against Iowa's $693.
Marketplace seller tax questions in Iowa
How much should an Iowa seller set aside?
About 7.3% of gross on the $45,000 example, $3,286 across self-employment tax, federal income tax and $644 to Iowa. In practice that means moving about $73 of every $1,000 payout into a separate account the day it lands, and sending roughly $821 to the IRS each quarter, no platform withholds any of this for you. Set aside from each payout rather than finding it in April.
Does the $45,000 on my 1099-NEC match what Iowa taxes?
No. Iowa taxes profit, not gross. After $26,775 of deductions the taxable figure is $18,225, so the Iowa bill is $644 rather than what gross alone would suggest. The form reports what the platform paid out, it knows nothing about your costs, and no one subtracts them for you. On this example 60% of the gross never becomes taxable income, but only for the seller who kept the records to prove it.