Iowa Guide for Canadians

Quick Facts

State Income Tax	Flat 3.8% (effective January 1, 2025)
Sales Tax	6% state + local (average 6.94%)
Driver's License Grace Period	30 days for new residents
Residency Requirement for Tax	183+ days or intent to make Iowa permanent home
Vehicle Registration Deadline	30 days for new residents
REAL ID Deadline	May 7, 2025 for domestic flights
Enhanced Driver's License	Not available

First 90 Days Checklist

Week 1-2: Essential Documents & Registration

• Register with USCIS if staying 30+ days (required by April 11, 2025)
• Gather required documents for driver's license
• Open US bank account
• Set up Iowa mailing address

Week 3-4: Official Registration

• Apply for Iowa driver's license (within 30 days)
• Complete knowledge and skills tests
• Register vehicle if brought from Canada (within 30 days)
• Register to vote (if eligible)

Month 2-3: Establishing Residency

• Update address with Canadian financial institutions
• Establish Iowa ties and connections
• Research healthcare options and insurance
• Note: 183+ days in Iowa = presumptive evidence of residency

Driver's License & Vehicle Requirements

For Canadian Citizens

Required Documents:

• Original valid Canadian passport (proof of legal presence)
• Social Security Number or letter of ineligibility
• Two proofs of Iowa residential address
• Birth certificate or citizenship documents for identity

Testing Requirements:

• Written knowledge test required for Canadian citizens
• Vision screening required
• Road skills test required - Iowa does not recognize foreign licenses
• Canadian license will be returned after successful testing

REAL ID Option:

• Available for qualifying non-citizens with proper documentation
• Required for domestic air travel after May 7, 2025
• Enhanced Driver's License not available in Iowa
• Passport required for international travel

Important Notes:

• 30-day limit to get Iowa license after establishing residency
• REAL ID required by May 7, 2025 for air travel
• Driver's license fees vary by type and duration
• Must surrender out-of-state license upon Iowa license issuance

Vehicle Registration

• Register within 30 days of establishing residency
• Annual registration renewal required
• Safety inspection may be required for older vehicles
• Iowa insurance required for registration

Tax & Residency Considerations

Iowa State Tax Structure

• **Flat income tax** 3.8% on all income (effective 2025)
• **No tax on retirement income** for qualifying pensions
• **No inheritance tax** (eliminated in 2025)
• **Moderate property taxes** (1.57% effective rate)
• **Moderate sales tax** 6% state + local (6.94% average)

Establishing Iowa Tax Residency

Iowa residency is based on domicile and time spent in state:

• Domiciled in Iowa (intent to make permanent home)
• Statutory resident: 183+ days in tax year
• Maintaining permanent place of abode in Iowa

Documentation to Establish Residency

• Iowa driver's license and voter registration
• Bank accounts and utility bills in Iowa
• Employment or business activities in Iowa
• Professional licenses, club memberships
• Property ownership or long-term lease

Tax Advantage

Iowa's new flat 3.8% income tax rate makes it one of the lowest tax states in the US. Combined with no tax on retirement income and no inheritance tax, Iowa offers significant tax advantages for Canadian residents.

US Federal Tax Implications for Canadians

Important: Under the Substantial Presence Test, you may be considered a U.S. resident for tax purposes.
New Requirement: Canadians staying 30+ days must register with USCIS by April 11, 2025.
Recommendation: Consult a cross-border tax professional.

Healthcare Considerations

Insurance Options

• Iowa has not expanded Medicaid for non-citizens
• Travel insurance strongly recommended
• Consider US health insurance if staying permanently
• Quality medical facilities in Des Moines, Iowa City, Cedar Rapids

Prescription Medications

• Bring adequate supply from Canada
• Understand prescription transfer requirements
• US prices often higher than Canadian prices
• Research pharmacy options and discount programs

Special Considerations for Snowbirds

New US Registration Requirements (2025)

• Canadians staying 30+ days must register with USCIS
• Registration required by April 11, 2025
• Print and carry latest I-94 as proof of legal entry
• Failure to register may affect future US travel

Maintaining Canadian Ties

• Keep principal residence in Canada
• Monitor days in U.S. for tax reasons (183-day rule)
• Maintain Canadian insurance & banking relationships
• Iowa domicile-based residency requires careful planning

Property Considerations

• Affordable property values compared to coastal states
• Moderate property tax rates (1.57% effective)
• Various local tax exemptions available
• Impact on Canada's principal residence exemption

Climate & Lifestyle Factors

• Continental climate with hot summers, cold winters
• Agricultural heritage with strong communities
• Low cost of living compared to national averages
• Growing Canadian communities in major cities

Border Proximity Considerations

• No direct border with Canada - nearest crossing in Minnesota
• Enhanced Driver's License not available in Iowa
• NEXUS/Global Entry beneficial for border crossings
• Consider proximity to Canadian services when choosing location

Travel Documentation

• Ensure passport validity (6+ months remaining)
• Consider Global Entry/NEXUS for easier border crossings
• Enhanced Driver's License not available in Iowa
• I-94 registration now required for 30+ day stays

Cost of Living Advantage

Iowa offers one of the lowest costs of living in the US, with affordable housing, utilities, and general expenses. Combined with the new low tax rates, Iowa provides excellent value for Canadian residents seeking US residency.

Key Contacts & Resources