Individual Income Tax
Iowa has nine individual income tax brackets that are indexed annually.
2017 individual income tax brackets:
| Taxable Income | ||
| Over | But Not Over | Tax Rate |
| $0 | $1,573 | 0.36% |
| $1,573 | $3,146 | 0.72% |
| $3,146 | $6,292 | 2.43% |
| $6,292 | $14,157 | 4.50% |
| $14,157 | $23,595 | 6.12% |
| $23,595 | $31,460 | 6.48% |
| $31,460 | $47,190 | 6.80% |
| $47,190 | $70,785 | 7.92% |
| $70,785 | —— | 8.98% |
Source: Iowa Department of Revenue
How do Iowa individual income tax rates compare with other Midwest states and when was the last time their rate changed?
- Iowa has the 2ND HIGHEST top individual tax rate (8.98%) in the midwest.
- 10 of 14 midwest states have cut tax rates since Iowa last cut taxes in 1998.
- Two states, Kansas and Illinois, have increased tax rates and are still lower than Iowa’s rate.
| State | Top Individual Income Tax Rate | Last Change to Tax Rate |
|---|---|---|
| Arkansas | 6.9% | Cut in 2015 |
| Illinois | 4.95% | Increased in 2017 |
| Indiana | 3.23% | Cut in 2015 |
| Iowa | 8.98% | Cut in 1998 |
| Kansas | 5.5% | Increased in 2017 |
| Michigan | 4.25% | Cut in 2011 |
| Minnesota | 9.85 | Cut in 1999 |
| Missouri | 5.9% | Cut in 2018 |
| Nebraska | 6.84% | Cut in 2014 (indexed for inflation) |
| Ohio | 4.997% | Cut in 2015 |
| Oklahoma | 5.0% | Cut in 2015 |
| North Dakota | 2.9% | Cut in 2015 |
| South Dakota | 0% - No State Income Tax | |
| Wisconsin | 7.65% | Cut in 2014 |
Source: Tax Foundation Facts & Figures 2017; ALEC. Some rates may come down, but only after certain triggers are met.
Iowa Individual Income Tax History
| Tax Year | Rates and Income Tax Brackets |
| 1934 | Graduated rates imposed ranging from 1.0% to 5.0% over 5 taxable income brackets with a top bracket of $4,000 |
| 1953 | Rates lowered to range from 0.75% to 3.75% over 5 taxable income brackets with top bracket raised to $5,000 |
| 1955 | Rates increased to range from 0.8% to 4.0% over 5 taxable income brackets with the top bracket lowered to $4,000 |
| 1957 | Rates lowered to range from 0.75% to 3.75% over the same taxable income brackets |
| 1965 | Rate changed to range from 0.75% to 4.5% over 6 taxable income brackets with the top bracket of $9,000 |
| 1967 | Additional bracket and new top 5.25% rate introduced. |
| 1971 | Rates increased on all brackets except lowest two, rates ranging from 0.75% to 7.0% |
| 1975 | Rates ranging from 0.5% to 13.0% over 13 taxable income brackets with the top bracket of $75,000 |
| 1979 | One-time indexation of brackets, raising top bracket to $76,725 |
| 1987 | Rates changed to 0.4% to 9.98% over 9 taxable income brackets with the top bracket of $45,000 |
| 1996 | Annual indexation of brackets instituted |
| 1998 | All tax rates cut 10% reducing the 9 bracket rates to 0.36%- 8.98%. The top bracket of $45,000 was indexed to $51,660. |
Source: Iowa Department of Revenue
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