Iowa state tax: Overview
Iowa's highest income tax bracket is lower than in many other states, but some residents must pay local income surtaxes in addition to Iowa state income tax. In 2025, Iowa’s individual income tax will drop to a 3.8% single tax rate due to recently signed legislation.
Iowa no longer taxes retirement income for taxpayers 55 or older.
[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
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Iowa income tax
Iowa Income Tax Range
- The lowest Iowa personal income tax rate is 4.82% (on more than $6,210 of taxable income for single filers and more than $12,420 of taxable income for joint filers).
- The highest rate is 5.7% (on more than $31,050 of taxable income for single filers and more than $62,100 of taxable income for joint filers).
- However, the individual tax rate will drop to 3.82% in 2025 due to legislation signed in May 2024.
Iowa also has local income surtaxes used for schools and emergency medical services.
Iowa income taxes in retirement: All retirement income is exempt for taxpayers who are at least 55 years old. (Prior to last year, taxpayers age 55 or older could only exclude up to $6,000 ($12,000 for joint filers) of federally-taxed income from retirement plans.)
Iowa sales tax
Iowa has a state sales tax rate of 6%. Localities can add as much as 2%, and the average combined rate is 6.941%, according to the Tax Foundation.
- Groceries are tax-exempt.
- Prescription drugs are tax-exempt.
- Diapers and some feminine hygiene products are tax-exempt.
How much are property taxes in Iowa?
In Iowa, the average effective property tax rate is 1.49%, and the median property tax bill is $2,703.
Iowa Property Tax Breaks for Retirees
Iowa introduced a new Homestead Tax Exemption for Claimants 65 Years or Older last year. For the 2024 assessment year, the exemption (amount excluded from a property's taxable value) is worth $6,500.
Iowa gas tax
Gasoline: $0.30 per gallon
Diesel: $0.325 per gallon
Iowa taxes on alcohol and tobacco
Cigarettes | $1.36 per pack |
Other tobacco products | 50% of wholesale price |
Beer | $0.19 per gallon |
Wine | $1.75 per gallon |
Liquor | State Controlled |
Iowa estate and inheritance taxes
Iowa started phasing out its inheritance tax three years ago by reducing the rate of tax by 20% each year (the original base rates ranged from 5% to 15%).
For 2024, Iowa's inheritance tax ranged from 2% to 6%, depending on the amount of the inheritance and the relationship of the recipient to the decedent. However, no tax is due on property left to a surviving spouse, stepchildren, lineal descendants (children, grandchildren, etc.), or lineal ascendants (parents, grandparents, etc.). In addition, no tax is due if the estate's net value is less than $25,000.
The tax will be completely repealed on January 1, 2025.
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