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Overview of Iowa Taxes

Iowa has a progressive tax system that features one of the country’s highest marginal rates and also one of the lowest bottom rates. The Hawkeye State has sales taxes near the national average and property taxes that are relatively high.

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  • Our Tax Expert

    Jennifer Mansfield, CPA Tax

    Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.

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Iowa state tax quick facts
  • Income tax: 0.36% - 8.98%
  • Sales tax: 6% - 7%
  • Property tax: 1.48% average effective rates
  • Gas tax: 30.5 cents per gallon of regular gasoline, 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. Even so, with an effective property tax rate of 1.48%, Iowa’s property taxes are 14th highest in the country.

The state’s income tax system features one of the highest top rates, which at 8.98% ranks 5th among all states, but also one of the lowest bottom rates. Earners in Iowa’s bottom tax bracket pay a rate of just 0.36%, lower than any other state with an income tax. The sales tax in Iowa, meanwhile, ranges from 6% to 7% when including local rates, near the national average.

Iowa Income Tax

The Hawkeye State’s income tax has nine income brackets, with marginal rates between 0.36% and 8.98%. In addition to that state income tax, there are local income surtaxes collected by nearly every school district in Iowa. First, here are the tax brackets for the statewide income tax.

Income Tax Brackets

All Filers
Iowa Taxable IncomeRate
$0 - $1,5730.36%
$1,573 - $3,1460.7%
$3,146 - $6,2922.43%
$6,292 - $14,1574.50%
$14,157 - $23,5956.12%
$23,595 - $31,4606.48%
$31,460 - $47,1906.80%
$47,190 - $70,7857.92%
$70,785+8.98%

Those 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. However, you can also claim the Iowa standard deduction: $2,000 for single filers and married persons who are filing separately and $4,920 for married persons filing jointly and heads of household.

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 17%. 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.

School District Surtaxes

School DistrictSurtax Rate
Adair-Casey8%
Adel-Desoto-Minburn0%
Agwsr8%
A-H-S-T12%
Akron-Westfield4%
Albert City-Truesdale0%
Albia10%
Alburnett1%
Alden9%
Algona7%
Allamakee8%
Alta8%
Ames4%
Anamosa7%
Andrew12%
Ankeny0%
Aplington-Parkersburg7%
Ar-We-Va8%
Atlantic9%
Audubon8%
Aurelia6%
Ballard2%
Battle Creek-Ida Grove1%
Baxter9%
Bcluw8%
Bedford10%
Bedford From Clearfield10%
Belle Plaine9%
Bellevue4%
Belmond-Klemme0%
Bennett1%
Benton4%
Bettendorf0%
Bondurant-Farrar3%
Boone6%
Boyden-Hull4%
Boyer Valley10%
Brooklyn-Guernsey-Malcom5%
Burlington0%
Cal16%
Calamus/Wheatland6%
Cam10%
Camanche0%
Cardinal4%
Carlisle0%
Carroll3%
Cedar Falls0%
Cedar Rapids5%
Center Point-Urbana6%
Centerville4%
Central City0%
Central Clayton1%
Central Clinton7%
Central Decatur8%
Central Lee7%
Central Lyon8%
Central Springs7%
Chariton6%
Charles City6%
Charter Oak-Ute10%
Cherokee5%
Clarinda8%
Clarion-Goldfield-Dows0%
Clarke5%
Clarksville12%
Clay Central-Everly1%
Clayton Ridge0%
Clear Creek-Amana12%
Clear Lake5%
Clinton8%
Colfax-Mingo8%
College0%
Collins-Maxwell7%
Colo-Nesco8%
Columbus10%
Coon Rapids-Bayard7%
Corning7%
Corwith-Wesley17%
Council Bluffs0%
Creston2%
Dallas Center-Grimes0%
Danville1%
Davenport0%
Davis County1%
Decorah6%
Delwood10%
Denison8%
Denver6%
Des Moines0%
Diagonal2%
Dike-New Hartford8%
Dubuque0%
Dunkerton10%
Durant9%
Eagle Grove7%
Earlham0%
East Buchanan1%
East Marshall10%
East Mills11%
East Sac County1%
East Union14%
Eastern Allamakee10%
Easton Valley1%
Eddyville-Blakesburg-Fremont5%
Edgewood-Colesburg8%
Eldora-New Providence5%
Emmetsburg13%
English Valleys16%
Essex10%
Estherville-Lincoln Central10%
Exira-Elk Horn-Kimballton7%
Fairfield1%
Farragut7%
Forest City8%
Fort Dodge2%
Fort Madison0%
Fremont-Mills16%
Galva-Holstein10%
Garner-Hayfield-Ventura6%
George-Little Rock12%
Gilbert0%
Gilmore City-Bradgate5%
Gladbrook-Reinbeck3%
Glenwood7%
Glidden-Ralston8%
Gmg10%
Graettinger-Terril2%
Greene County8%
Grinnell-Newburg2%
Griswold1%
Grundy Center7%
Guthrie Center7%
Hamburg7%
Hampton-Dumont3%
Harlan7%
Harmony10%
Harris-Lake Park0%
Hartley-Melvin-Sanborn7%
Highland7%
Hinton7%
Hlv8%
Howard-Winneshiek6%
Hubbard-Radcliffe0%
Hudson2%
Humboldt5%
Ikm-Manning9%
Independence7%
Indianola5%
Interstate 350%
Iowa City5%
Iowa Falls7%
Iowa Valley14%
Janesville7%
Jesup0%
Johnston0%
Keokuk0%
Keota1%
Kingsley-Pierson4%
Knoxville6%
Lake Mills9%
Lamoni8%
Laurens-Marathon8%
Lawton-Bronson7%
Le Mars0%
Lenox6%
Lewis Central6%
Linn-Mar0%
Lisbon4%
Logan-Magnolia7%
Lone Tree9%
Louisa-Muscatine9%
Lu Verne13%
Lynnville-Sully8%
Madrid3%
Manson-Northwest Webster7%
Maple Valley-Anthon Oto2%
Maquoketa9%
Maquoketa Valley0%
Marcus-Meriden Cleghorn8%
Marion4%
Marshalltown0%
Martensdale-St Marys1%
Mason City7%
Mediapolis7%
Melcher-Dallas1%
Mfl Mar Mac12%
Midland12%
Mid-Prairie14%
Missouri Valley5%
Moc-Floyd Valley5%
Montezuma8%
Monticello5%
Moravia13%
Mormon Trail6%
Morning Sun7%
Moulton-Udell13%
Mount Ayr6%
Mount Ayr6%
Mount Pleasant5%
Mount Vernon6%
Murray13%
Muscatine1%
Nashua-Plainfield9%
Nevada5%
New Hampton6%
New London9%
Newell-Fonda7%
Newton5%
Nodaway Valley3%
North Butler5%
North Cedar10%
North Fayette8%
North Iowa11%
North Kossuth6%
North Linn5%
North Mahaska3%
North Polk5%
North Scott1%
North Tama9%
North Union8%
North Winneshiek10%
Northeast10%
Northeast Hamilton9%
Northwood-Kensett5%
Norwalk0%
Odebolt-Arthur2%
Oelwein7%
Ogden7%
Okoboji2%
Olin10%
Orient-Macksburg15%
Osage2%
Oskaloosa4%
Ottumwa0%
Panorama4%
Paton-Churdan5%
Pcm5%
Pekin7%
Pella4%
Perry3%
Pleasant Valley0%
Pleasantville9%
Pocahontas Area1%
Postville15%
Prairie Valley11%
Prescott0%
Red Oak9%
Remsen-Union7%
Riceville11%
River Valley10%
Riverside9%
Rock Valley0%
Roland-Story8%
Rudd-Rockford-Marblerock3%
Ruthven-Ayrshire10%
Saydel0%
Schaller-Crestland8%
Schleswig6%
Sergeant Bluff-Luton0%
Seymour11%
Sheldon7%
Shenandoah5%
Sibley-Ocheyedan9%
Sidney10%
Sigourney1%
Sioux Center5%
Sioux Central0%
Sioux City3%
Solon5%
South Central Calhoun0%
South Hamilton8%
South O'brien10%
South Page11%
South Tama9%
South Winneshiek6%
Southeast Polk5%
Southeast Warren10%
Southeast Webster-Grand5%
Spencer4%
Spirit Lake6%
Springville6%
St Ansgar7%
Stanton4%
Starmont2%
Storm Lake3%
Stratford9%
Sumner-Fredericksburg7%
Tipton10%
Treynor5%
Tri-Center8%
Tri-County14%
Tripoli0%
Turkey Valley0%
Twin Cedars11%
Twin Rivers10%
Underwood0%
Union8%
United7%
Urbandale0%
Valley8%
Van Buren9%
Van Meter4%
Garner-Hayfield-Ventura6%
Villisca1%
Vinton-Shellsburg7%
Waco0%
Wapello9%
Wapsie Valley11%
Washington9%
Waterloo0%
Waukee0%
Waverly-Shell Rock6%
Wayne2%
Webster City5%
West Bend-Mallard0%
West Branch10%
West Burlington0%
West Central13%
West Central Valley5%
West Delaware Co5%
West Des Moines0%
West Fork1%
West Hancock10%
West Harrison2%
West Liberty16%
West Lyon9%
West Marshall9%
West Monona6%
West Sioux6%
Western Dubuque Co6%
Westwood7%
Whiting5%
Williamsburg6%
Wilton2%
Winfield-Mt Union7%
Winterset4%
Woodbine14%
Woodbury Central5%
Woodward-Granger7%

Iowa Tax Credits

Iowa offers several types of tax credits to state taxpayers. The Earned Income Tax Credit is equal to 7% of the federal credit and is refundable, which means that even if you have no Iowa tax liability you may still claim it and receive a refund on it.

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 grades kindergarten through 12. The credit is 25% of the first $1,000 paid for tuition and books. If you are looking to get help filing your return, you can look into the best tax software.

Iowa Sales Tax

The base sales tax rate in Iowa is 6%, but nearly every county collects an additional “local optional” tax of 1%, meaning the actual rate collected in most places is 7%. Just six counties do not collect that additional tax: Dallas, Johnson, Osceola, Polk, Van Buren and Warren. In those six counties, there are some cities that have voted to collect the local option tax.

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, Turkish baths and vehicle repair.

The most significant exception to the sales tax in Iowa is food. 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 items 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 $1,900 a year. That is 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 1.48%, higher than all but 13 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.

Calculate Your Property Taxes: Iowa Property Tax Calculator

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, lineal descendants (children, step-children, grandchildren, great-grandchildren) and 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 5% and 10%, with any inheritance over $150,000 facing the top rate. Nieces, nephews, aunts, uncles and all unrelated beneficiaries pay between 10% and 15%, with all inheritance over $100,000 facing the top rate.

Iowa Gasoline Tax

The gas tax in Iowa is 30.5 cents per gallon of regular fuel and 32.5 cents per gallon of diesel. Those are both just below the national averages.

Iowa Cigarette Tax

Iowa has the nation’s 28th highest cigarette tax, at $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

Excises taxes on alcohol in Iowa vary depending on the type of alcohol being sold. Liquor faces one of the highest rates in the country at $12.52 per gallon, while the tax on beer is much lower at 19 cents per gallon.

Photo credit: flickr
  • 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.

Places with the Lowest Tax Burden

Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.

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Rank County Income Tax Sales Tax Property Tax Fuel Tax

Methodology

Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.

To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.

In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.

For property taxes, we compared the median property taxes paid in each county.

For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.

We then added the dollar amount for income, sales, property and fuel taxes to rank the counties to calculate a total tax burden.

Sources: US Census Bureau 2016 American Community Survey, Government Sources, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration, SmartAsset