Mortgage Interest Deduction in Iowa
State income tax rate
3.8%
Itemized deductions allowed
✅ Yes
State-Level Mortgage Interest Deduction
Iowa reduced its top rate to 3.8% in 2026 as part of a phased reform. Iowa conforms to federal itemized deductions — mortgage interest is deductible on Iowa returns for those who itemize federally.
Combined Federal + Iowa Savings
If you paid $18,000 in mortgage interest last year and itemize on both returns, your combined tax savings would be approximately:
- Federal (22% bracket): $3,960
- Iowa (3.8% rate): $684
- Total estimated savings: $4,644
These are estimates based on a 22% federal bracket. Your actual savings depend on your specific tax situation.