Overview of Iowa Taxes
The Hawkeye State has a progressive income tax system with three tax brackets. The state’s income tax rates range from 4.40% to 5.70%. Over 300 school districts in Iowa also levy individual income surtaxes.
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Iowa Paycheck Calculator
Iowa Paycheck Quick Facts
- Iowa income tax rate: 4.40% - 5.70%
- Median household income: $71,433 (U.S. Census Bureau)
- Counties that have local income taxes: 1, plus 300+ school districts
How Your Iowa Paycheck Works
When you start a new job, you fill out a W-4 form and the information on this form tells your employer how much to withhold in taxes from each of your paychecks. Regardless of your pay frequency, your employers will take out federal income taxes from your wages. This money goes to the IRS, who will put it toward your annual income taxes.
Multiple factors affect your withholdings. Your marital and filing status is a big part of it. Whether you’re single or married; whether you’re filing jointly or separately; and whether you file as the head of the household, will all impact your income tax bracket. If you qualify as a common-law couple, you have the option to file jointly as well. If you have qualifying dependents, this may also affect your bill come tax season. Instead of using allowances, the new W-4 features a five-step process that requires filers to use annual dollar amounts to indicate any additional income.
In addition to federal income taxes, your employer withholds 1.45% of your salary for Medicare taxes and 6.2% for Social Security taxes. Together these make up FICA taxes. If you file your taxes as single and earn in excess of $200,000, you will be charged a 0.9% Medicare surtax. Joint filers making over $250,000 and married individuals who file separately with income above $125,000 also pay the surtax.
Note that the FICA taxes are actually double the rate that you pay because your employer contributes an equal amount. If you are self-employed, you will have to pay the full rate of 2.9% for Medicare and 6.2% for Social Security. The good news is that when you file your taxes, there are some deductions you can take to recoup the “employer” portion.
Another factor that affects the size of your paycheck is your pay frequency. If you are paid once a month, your paychecks will be bigger than if you get paid bi-weekly.
Known for its rolling plains and beautiful cornfields, Iowa is home to an income tax system that ranges from 4.40% to 5.70%.
The tax system is made up of three tax brackets which are dependent upon the income levels of residents. The brackets remain the same for taxpayers who file as single, married filing separately or head of household. And for joint filers, the tax brackets double.
Iowans are taxed at 4.40% on the first $6,210 ($12,420 for joint filers) of their income; 4.82% on the next $24,840 ($49,680 for joint filers); and 5.70% on the rest of their income above $31,050 ($62,100 for joint filers).
Appanoose County has an additional 1% local income tax.
Many of Iowa's 326 school districts levy an income surtax that is equal to a percentage of the Iowa taxes paid by residents. So if you pay $2,000 in Iowa state taxes and your school district surtax is 10%, you have to pay another $200.
A financial advisor can help you understand how 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.
How You Can Affect Your Iowa Paycheck
There are a number of ways that you can tweak your Iowa paycheck. First of all, it’s a good idea to review your W-4 form each year. Since your W-4 form is the information that your employer uses to determine how much to withhold, you want to make sure the information is correct.
If you got a large tax refund, you may be overpaying on your taxes throughout the year. Some people might like getting a big refund once a year as it forces them to save that money, but it’s also nice to have that money in your bank account throughout the year.
Your paycheck size will change if you take advantage of any company benefits. For example, if you get medical insurance for you and your spouse through your employer, those premiums will be paid out from your salary.
Your employer may also offer pre-tax benefits. Money you put in these accounts comes out of your pay before income tax and thus it lowers how much of your salary is subject to income tax. Examples include a health savings account (HSA) or a flexible spending account (FSA). If you know you have a few fixed health expenses, for example, you can put that money aside into one of these accounts so that you have it when you need it and save on taxes along the way. One thing to note with FSAs is that you can only roll over a maximum of $640 from 2024 to 2025, so if you don’t use the money you put in, you may lose it.
Other pre-tax contributions worth considering are for retirement accounts, such as a 401(k) or 403(b). You should especially consider one of these accounts if your employer offers a matching program.
If you are planning on buying a home in the Hawkeye State, take a look at our Iowa mortgage guide for the important details about rates and the different type of loans you’ll want to consider.
