Iowa State Taxes
Quick Tax Facts
- Income Tax: 4.4% – 6%
- State Sales Tax: 6%
- Median Property Tax: $1,569
If you looking for a state with an overall low cost of living, put Iowa on your list. Home prices are below the national average and there are plenty of job opportunities. More recently, the state reduced its income tax brackets to just four, lowering the top rate from 8.53% to just 6%. Unfortunately, there is a downside to living here; even with home values in the modest range, the average effective property tax is around 1.50%, which is one of the highest in the nation.
Iowa Income Tax
For the 2023 tax year, Iowa has eliminated the standard deduction for all taxpayers and reduced its income brackets to just four rates. There are two different tables; one for married filing jointly and another for all other taxpayers.
|Iowa 2023 Income Tax Brackets – Married Filing Jointly|
|Taxable Income||Tax Rate|
|$0 – $11,999||4.4%|
|$12,000 – $59,999||4.82%, plus $528|
|$60,000 – $149,999||5.7%, plus $2,841.60|
|$150,000 or more||6%, plus $7,971.60|
|Iowa 2023 Income Tax Brackets – All Other Taxpayers|
|Taxable Income||Tax Rate|
|$0 – $5,999||4.4%|
|$6,000 – $29,999||4.82%, plus $264|
|$30,000 – $74,999||5.7%, plus $1,420.80|
|$75,000 or more||6%, plus $3,985.80|
Previously, all taxpayers, regardless of filing status, used the same income tax rates and there were a total of nine different brackets.
Who Must File?
Full-year and part-year residents must file an Iowa income tax return (IA 1040) if any of the following requirements are met:
- Your filing status is single and you have a net income of more than $9,000 ($24,000 of 65+).
- Your filing status is other than single and you have a net income of more than $13,500 ($32,000 if you or your spouse is 65+).
- You are claimed as a dependent on another taxpayer’s return and have a net income of $5,000 or more.
- You are active duty military stationed outside of Iowa but Iowa is your legal residence, and your net income meets the thresholds above.
- You are subject to Iowa lump-sum tax.
Non-Residents & Part-Year Residents
Non-residents and part-year residents who meet the income thresholds above are required to file if they have $1,000 or more in net income from Iowa sources. If you’re a non-resident or part-year resident subject to Iowa lump-sum tax or alternative minimum tax, you’ll need to file even if your income from Iowa sources is less than $1,000.
Iowa residents working for wages or a salary in Iowa are not required to file an Iowa income tax return due to a reciprocal agreement. Instead, they should complete and file IA 44-016, Employee’s Statement of Nonresidence in Iowa, with their employer.
Iowa Sales Tax
Iowa has a state sales tax rate of 6%. Additionally, most local jurisdictions impose a local option sales tax of 1%. When compared to other states, Iowa ranks around the middle for its combined sales tax rate.
Iowa Property Taxes
Iowa levies property taxes at the county or city level. Cities with populations above 10,000 may appoint a city assessor. The property tax cycle takes 18 months. Assessments begin on January 1 of every odd-numbered year, but the first tax installment isn’t due until the fall of the following year. The second installment is due in the spring, two years after the assessment began. For example, a home assessed in January 2021 would have a payment due in the fall of 2022 and the spring of 2023.
The median property tax in Iowa is approximately $1,569 annually. Johnson County has the highest property tax at an average of $2,526. The lowest amount is $561 in Pocahontas County.
Iowa Tax Holidays
Iowa hosts an annual Sales Tax Holiday on the first Friday and Saturday in August. Clothing and footwear priced less than $100 per item are exempt from both state and local sales taxes.
Iowa Tax Resources
If you need assistance preparing your Iowa state taxes, you can speak with a tax professional from Tax Defense Network by calling 855-476-6920.
You can also visit the Iowa Department of Revenue website for additional resources.