Iowa

Tax Rate Range: Low - 0.36%; High - 8.98%
Income Brackets: (2007) Lowest - $1,343; Highest - $60,435
Number of Brackets: 9
Personal Tax Credits: Single - $40; Married filing jointly - $80;
Dependents - $40; 65 years and older - $20
Standard Deduction: (2007) Single - $1,700; Married filing jointly - $4,200
Medical/Dental Deduction: Federal amount
Federal Income Tax Deduction: Full
Retirement Income Taxes: If you receive a pension, annuity, self-employed retirement plan, deferred compensation, IRA or other retirement plan benefits, you may be eligible to exclude from Iowa income tax a portion of the retirement income that is taxable on your Federal return. Distributions on Roth IRA's are exempt from income tax. Social Security benefits are not included. For married taxpayers filing jointly the exclusion for 2007 is the lesser of $24,000 or the taxable amount of the retirement income. For single taxpayers an exemption the lesser of $12,000. To qualify for the exclusion you must be either age 65 or older on December 31, disabled or a surviving spouse or a survivor having an insurable interest in an individual who would have qualified for the exclusion during the year. Out-of-state government pensions qualify for exemptions.
Retired Military Pay: Up to $12,000 can be excluded for joint filers and up to $6,000 for all other filing statuses for those 55 and older, disabled or surviving spouse of qualifying person.

State Tax Software

Military Disability Retired Pay: Disability Portion - Length of Service Pay; Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless combat incurred. Retired Pay - Based solely on disability: Member on September 24, 1975 - No tax; Not Member on September 24, 1975 - Taxed, unless all pay based on disability and disability resulted from armed conflict, extra-hazardous service, simulated war, or an instrumentality of war.
VA Disability Dependency and Indemnity Compensation: Not subject to federal or state taxes
Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.

Sales Taxes

State Sales Tax: 5% (food and prescription drugs exempt); local option taxes can add up to another 2%.
Gasoline Tax:: 22 cents/gallon
Diesel Fuel Tax: 23.5 cents/gallon
Gasohol Tax: 21.7 cents/gallon
Cigarette Tax: $1.36/pack of 20; $1.70/pack of 25

Iowa has more than 2,000 taxing authorities. All property is assessed at 100% of market value. Most property is taxed by more than one taxing authority. The tax rate differs in each locality and is a composite of county, city, school district and special levies. A property tax credit is available to residents whose total household income is less than $18,347 and are age 65 or older, totally disabled or are a surviving spouse (not remarried) and born before 1934. A homestead tax credit is given to residents who live in the state for at least six months of each year and actually live on the property on July 1. Once a person qualifies, the credit continues. Property taxes may be suspended or reduced if the property owner receives Supplemental Security Income or lives in a nursing home and the Department of Human Services is paying part or all of the costs. The suspended taxes will have to be paid when a property is sold or transferred. For more details, click here.
The Iowa inheritance tax ranges from 1% to 15% depending on the amount of the inheritance and the relationship of the recipient to the decedent. The surviving spouse's share, regardless of the amount, is not subject to tax. Click here for details. The estate tax is the amount by which the allowable federal credit for state death taxes exceeds the inheritance tax due from the estate.
For further information, visit the Iowa Department of Revenue or call 515-281-3114.

Last Updated ( Monday, 21 January 2008 )

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