Iowa

Sales Tax

  • Statewide: 6.0%
  • Counties can levy an additional sales tax of no more than 1.0%.
  • Current average sales tax (with local taxes included): 6.94%
  • Common Exceptions at State Level:
    • Prescription Medicine: Exempt
    • Unprepared Foods: Exempt
  • Gasoline Tax: 48.40 cents/gallon (Includes all state, local, and federal taxes)
  • Diesel Fuel Tax: 56.90 cents/gallon (Includes all state, local, and federal taxes)

 

Personal Income Tax

  • Personal Income Tax Rate Range: Nine brackets from .33% to 8.53% (on income over $78,435). Rates move to between 4.4% and 6.0% in 2023.
  • Standard deduction, Single Filing Status: $2,210. Married Filing Jointly: $5,450
  • Personal Exemption Allowance: $40. Dependent Exemption: $40 (taken as tax credit)
  • Itemized Deductions Allowed? Yes, subject to limitations
  • State allows city- and and county-level income tax.
  • Retirement Income
    • Social Security: Exempt
    • IRAs: Taxable at ordinary income tax rates*
    • 401Ks/Defined contribution employer retirement plans: Taxable at ordinary income tax rates*
    • Private pensions: Taxable at ordinary income tax rates*
    • Public Pensions: Taxable at ordinary income tax rates*
    • Taxpayers 55 and older, disabled, or a qualifying surviving spouse can exclude up to $6,000 of certain retirement income.
    • Federal income tax deductible.
    • Beginning in 2023, all retirement income is exempt if 55 or older. 
  • Military Pay
    • Active Duty Pay: Exempt
    • Military Retirement Pay: Exempt 
    • Military Disability Pay: Exempt
    • VA Disability Dependency & Indemnity Compensation Benefits: Exempt
    • SPB/SSPB/RCSBP: Exempt 

 

Property Tax

  • Local municipalities average 1.57% of the property's assessed value.
  • Calculation of assessed value: 100% of fair market value, but can't increase more than 3% annually; assessed every odd-numbered year.
  • Relief programs for:
    • Owner-occupied: May be eligible for reduction of $4,850 of assessed value.
    • Veterans: Exemption of up to $1,852 if meet certain requirements.
    • 65 to 69 or Disabled: May be eligible for tax credit of up to $1,000 if income is less than $24,354. Relief also available for renters.
    • 70 and over: Up to a $1,000 credit based on income requirements.
    • Disabled Veterans: May be eligible for 100% exemption if 100% service-related disability.
  • Personal Property Tax: Yes. Rates and exemptions vary.

 

Inheritance & Estate Taxes: An inheritance tax of 3% to 9% is imposed on estates over $25,000, but most family members are exempt. There is no estate tax.

 

Department of Revenue website: www.tax.iowa.gov

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