Iowa Income Tax Calculator

Taxes in Iowa

Iowa State Tax Quick Facts

• Income tax: 4.40% - 6.00%
• Sales tax: 0% - 1%
• Property tax: 1.57% effective rate
• Gas tax: 24.5 to 30 cents per gallon of regular gasoline, 29.8 to 32.5 cents per gallon of diesel

Earlier this decade, Iowa enacted one of the largest tax cuts in the state’s history. While that cut was largely focused on commercial property owners, it also lowered residential property taxes across the state. Yet, the effective property tax rate of 1.57% – the rate that a typical homeowner pays – is 10th highest across the country. 

The state’s income tax system features a relatively narrow set of marginal tax rates, ranging from 4.4% to 6%. The sales tax in Iowa, meanwhile, starts with a 6% statewide levy plus any additional sales taxes charged at the local level. 

A financial advisor can help you understand how these taxes fit into your overall financial goals. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Iowa Income Taxes

The Hawkeye State’s income tax system has just four income brackets and the following rates:

These rates are assessed on Iowa taxable income, which is income after all deductions have been subtracted. In Iowa, you may claim itemized deductions even if you claimed the standard deduction on your federal return. Keep in mind that as of tax year 2023, Iowa has eliminated its state standard deduction.

After determining their Iowa state tax liability, many Iowa taxpayers must pay a school district surtax. This is equal to a percentage of Iowa taxes paid, with rates ranging from 0% to 20%. So, for example, if your Iowa tax liability is $1,000, and your school district surtax is 15%, you would pay an additional $150. The table below shows the school district surtaxes for all Iowa school districts that collect a surtax.

Iowa Tax Credits

Iowa offers several types of tax credits to state taxpayers. The Earned Income Tax Credit is available to Iowa residents who have an income below a threshold that varies depending on your number of dependents. The credit is worth 15% of the amount of your federal credit.

The Child and Dependent Care Credit is equal to up to 75% of the federal credit. The percentage diminishes with higher levels of income and is zero for taxpayers with income of $45,000 or higher. Taxpayers who do not claim that credit may claim the Early Childhood Development Credit, which is equal to 25% of the first $1,000 of certain expenses paid for children ages three though five.

The Tuition and Textbook Credit is available to taxpayers with a dependent who is in school, from kindergarten through grade 12. The credit is 25% of the first $2,000 paid for tuition and books.

Iowa Sales Tax

The base sales tax rate in Iowa is 6%, but many counties collect an additional “local optional” tax of 1%, meaning the actual rate collected in most places is 7%. A few counties do not collect that additional tax on a county-wide basis, but some cities within those counties do.

Iowa taxes all tangible personal property (with a few exceptions) as well as most services. Some examples of the types of services that are taxed in Iowa are haircuts, television subscriptions, dating services, exterminators, dry cleaning, shoe repair, and vehicle repair.

Food is the most significant exception to the sales tax in Iowa. Most items you can find in a grocery store or market are not taxable. For example, bread, fish, frozen foods, fruit, tea and butter are all exempt. Food prepared for immediate consumption and candy are all taxable, however. Prescription drugs and many non-prescription medications are also tax-exempt. No tax is collected on insulin, nebulizers, oxygen or diabetic testing devices.

Clothing is also exempt during Iowa’s annual sales tax holiday. During the first Friday and Saturday in August, clothing and footwear costing less than $100 can be purchased sales tax-free.

Iowa Property Tax

Property taxes in Iowa are based on a variety of factors. State and local governments calculate the overall rate for residential homes in a certain tax district based on the total value of homes in that area and the total amount of revenue the tax needs to generate. That rate is then applied to the assessed value of each home. This means that rates can go up or down from year to year, even if your own home’s value does not change.

The average property tax paid in Iowa is around $2,522 a year. That is slightly lower than the national average, but because Iowa home values are also lower than the national average, the average effective property tax rate (annual taxes as a percentage of home values) ranks much higher. The average effective property tax rate in Iowa is 1.57%, higher than all but eight other states.

If you’re thinking about buying a home in the Hawkeye State or looking into refinancing a property, our Iowa mortgage guide lays out the most important information about mortgage rates, the different kinds of loans and details about each county.

Iowa Inheritance Tax

While there is no estate tax in Iowa, inheritances left to certain beneficiaries may be taxed. If the decedent’s estate has a net value below $25,000, there is no tax. Likewise, surviving spouses, lineal descendants (children, step-children, grandchildren, great-grandchildren), lineal ascendants (parents, step-parents, grandparents, great-grandparents) are all exempt from the tax.

Other beneficiaries pay rates that vary depending on their relation to the deceased. Brothers and sisters pay between between 2% and 4% for tax year 2023, and between 1% and 2% for tax year 2024. Any inheritance over $150,000 faces the top rate. Nieces, nephews, aunts, uncles and all unrelated beneficiaries pay between 4% and 6% for tax year 2023, and between 2% and 3% for tax year 2024, with all inheritances over $100,000 facing the top rate.

Starting with the 2021 tax year, Iowa started repealing its state inheritance tax. Rates have been gradually decreasing since then and the tax will be fully repealed on Jan. 1, 2025.

Iowa Gasoline Tax

The gas tax in Iowa is between 24.5 and 32.5 cents per gallon of regular fuel and between 29.8 and 32.5 cents per gallon of diesel. These are both a bit above national averages.

Iowa Cigarette Tax

Iowa has a cigarette tax of $1.36 per pack.

Iowa Capital Gains Tax

Both long- and short-term capital gains are taxed at the full Iowa income tax rates, depending on your income tax bracket.

Iowa Alcohol Tax

Excise taxes on alcohol in Iowa vary depending on the type of alcohol being sold. Liquor faces a rate of $12.49 per gallon, while the tax on beer is much lower at 19 cents per gallon.

• The Iowa state flag is similar to the French flag. This is because the state was originally a part of French Louisiana.
• Agricultural crops cover 60% of Iowa’s land area.
• Every four years the Iowa Caucuses receive significant national attention because they are the first event in the process to select presidential candidates.