Personal income tax
Iowa collects income taxes from its residents at the following rates:
- 0.36 percent on the first $1,494 of taxable income.
- 0.72 percent on taxable income between $1,495 and $2,988.
- 2.43 percent on taxable income between $2,989 and $5,976.
- 4.50 percent on taxable income between $5,977 and $13,446.
- 6.12 percent on taxable income between $13,447 and $22,410.
- 6.48 percent on taxable income between $22,411 and $29,880.
- 6.80 percent on taxable income between $29,881 and $44,820.
- 7.92 percent on taxable income between $44,821 and $67,230.
- 8.98 percent on taxable income of $67,231 and above.
Iowa income tax returns are due 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 website.
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.
Local taxing jurisdictions also may impose a local option sales tax if approved by voters. This 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 It usually remains in effect until it is repealed, but the ordinance may include a sunset clause.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 specific rates are applied by city or county. Additional sales tax information can be found on the Iowa Department of Revenue website.
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 (43 percent) of the property tax collected each year in Iowa. Farmers pay more than 22 percent and businesses and industry more than 31 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 website.
Inheritance and estate taxes
Iowa collects an inheritance tax that ranges from 5 percent to 15 percent depending on the amount of the inheritance and the relationship of the recipient to the decedent. Form IA706 must be filed.
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 wages 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.