Iowa's personal income tax system has nine tax brackets. They range from 0.36 percent to 8.98 percent. The tax is imposed on the Iowa net income of individuals, estates and trusts. More on Iowa taxes can be found in the tabbed pages below.
Personal income tax
- Iowa collects income taxes from its residents at the following rates:
-- 0.36 percent on the first $1,379 of taxable income
-- 0.72 percent on taxable income between $1,380 and $2,758
-- 2.43 percent on taxable income between $2,759 and $5,516
-- 4.5 percent on taxable income between $5,517 and $12,411
-- 6.12 percent on taxable income between $12,412 and $20,684
-- 6.48 percent on taxable income between $20,685 and $27,579
-- 6.8 percent on taxable income between $27,580 and $41,369
-- 7.92 percent on taxable income between $41,370 and $62,054
-- 8.98 percent on taxable income of $62,055 and above. - Iowa income tax returns are due on April 30. If April 30 falls on a Saturday or Sunday, the due date is the following Monday. When paper returns are filed, the postmark determines whether a return is filed on time. When e-filed, the transmittal date is used.
- Downloadable tax forms can be found on the Iowa Department of Revenue Web site.
Sales taxes
- The state sales tax rate in Iowa increased to 6 percent (from 5 percent) on July 1, 2008. Iowa also collects a corresponding use tax on out-of-state purchases.
- Iowa has two local option sales taxes that may be imposed by counties after an election in which the majority of voters favors the tax. They are in addition to the 5 percent state sales tax:
-- The "regular" local option tax is imposed on the gross receipts from sales of tangible personal property. It usually remains in effect until it is repealed, but the ordinance may include a sunset clause.
-- The school infrastructure local option tax is automatically repealed 10 years after it is imposed, unless the ballot imposes a shorter time frame. - A map shows Iowa's local option taxing jurisdictions. You also may see the taxing areas by city or county. Additional sales tax information can be found on the Iowa Department of Revenue Web site.
Personal and real property taxes
- Property tax is levied on the taxable value of real property -- that is, mostly land, buildings, structures and other improvements that are constructed on or in the land, attached to the land or placed upon a foundation. Typical improvements include buildings, houses or mobile homes, fences and paving.
- Five classes of real property are evaluated: residential, agricultural, commercial, industrial and utilities/railroad (which is assessed at the state level). Homeowners pay less than half (47 percent) of the property tax collected each year in Iowa. Farmers pay 16 percent and businesses and industry a total of 34 percent. Utility companies, including railroads, pay 3 percent.
- The assessed value is 100 percent of market value, except for: (1) agricultural realty (assessed according to its productivity), and (2) computers, industrial machinery and equipment, which are exempt.
- Iowa has more than 2,000 taxing authorities. Most property is taxed by more than one taxing authority. The tax rate differs in each locality and is a composite of county, city, school district and special levies.
- State law requires that all real property be assessed every two years in odd-numbered years. Railroads and public utilities, which are assessed by the Iowa Department of Revenue and Finance, are assessed every year.
- Iowa offers a variety of full and partial property tax exemptions and credits. More information on Iowa property tax credits and exemptions can be found on the Iowa Department of Revenue Web site.
Inheritance and estate taxes
- Iowa collects an inheritance tax through the filing of Form IA706.
- The surviving spouse's share, regardless of amount, is not subject to tax. State tax also may be limited or even eliminated for bequests left to other family members. See Form IA706 for details.
- Iowa's estate tax was linked to the federal estate tax. Due to the phaseout of the federal estate tax credit, Iowa no longer imposes an estate tax.
Other Iowa tax facts
- Iowa and Illinois have a reciprocal tax agreement. Any wages or salary earned by an Iowa resident who works in Illinois is taxable only to Iowa; any ages or salary earned by an Illinois resident working in Iowa is taxable only to Illinois.
Iowa residents working in Illinois should file Illinois Form IL-W-5-NR with the employer to ensure that Iowa income tax is withheld. - Iowa taxpayers can check the status of their state tax refunds at a special Department of Revenue Web page.
For information, contact the Iowa Department of Revenue at (515) 281-3114 if calling from Des Moines or out of state, or (800) 367-3388 if calling from elsewhere in Iowa or Rock Island, Moline or Omaha. You also can visit the state's tax Web site.To download tax forms on this site, you will need to install a free copy of Adobe Acrobat Reader. Click here for instructions.
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