Iowa

The Facts on Iowa’s Tax Climate

Here are some basic facts on Iowa’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 6 in Iowa
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, Iowa taxpayers work until April 6 (ranked 29th nationally) to pay their total tax bill, 6 days earlier than national Tax Freedom Day (April 12). The Tax Freedom Days of neighboring states are: Minnesota, April 16 (8th); Wisconsin, April 16 (7th); Illinois, April 15 (9th); Missouri, April 4 (33rd); Nebraska, April 12 (15th); and South Dakota, March 30 (46th).
Full study of Tax Freedom Day, nationwide and in each state

Iowa's State and Local Tax Burden Below National Average
Iowa's 2009 state and local tax burden of 9.5% of income is below the national average of 9.8%. Iowa's tax burden has decreased overall from 10.3% (20th nationally) in 1977 to 9.5% (24th nationally) in 2009. Iowans pay $3,688 per capita in state and local taxes.
Iowa's State-Local Tax Burden, 1977-present
Other States' State/Local Tax Burdens
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

Iowa's 2012 Business Tax Climate Ranks 41st
Iowa ranks 41st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. The ranks of neighboring states are as follows: Minnesota (45th), Wisconsin (43rd), Illinois (28th), Missouri (15th), Nebraska (30th), and South Dakota (2nd).
50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

Iowa's Individual Income Tax System
Iowa's personal income tax system consists of nine brackets with a top rate of 8.98%, kicking in at an income level of $63,315. That top rate ranks 5th highest among states levying individual income taxes. Iowa's 2008 state-level individual income tax collections were $954 per person, which ranked 21st highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Iowa's Corporate Income Tax System
Iowa's corporate tax structure consists of four brackets with a top rate of 12%, kicking in at an income level of $250,000. That top rate is the highest corporate income tax rate in the nation. In 2008, state-level corporate tax collections (excluding local taxes) were $116 per capita, which ranked 36th highest nationally.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita

Iowa Sales and Excise Taxes
Iowa levies a 6% general sales or use tax on consumers, which is slightly above the national median of 5.85%. In 2007 combined state and local general and selective sales tax collections were $1,165 per person, which ranks 39th highest nationally. Iowa's gasoline tax stands at 22 cents per gallon and ranks 31st highest nationally. Iowa's cigarette tax stands at $1.36 per pack of twenty and ranks 22nd nationally. The sales tax was adopted in 1933, the gasoline tax in 1925 and the cigarette tax in 1921.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

Iowa Property Taxes
Iowa's local governments collected $1,144.35 in property taxes during fiscal year 2006, which is the latest year available from the Census Bureau. Iowa is one of the 13 states that collect no state-level property taxes. The state’s per capita property tax collections rank 21st nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Iowa is a Beneficiary State
Iowa taxpayers receive more federal funding per dollar of federal taxes paid compared to the average state. Per dollar of federal tax collected in 2005, Iowa citizens received approximately $1.10 in the way of federal spending. This ranks the state 24th nationally and represents a rise from 1995 when Iowa received $1.06 per dollar of taxes in federal spending (then ranked 26th nationally). Neighboring states and the amount of federal spending they received per dollar of federal taxes paid were: Minnesota ($0.72), Wisconsin ($0.86), Illinois ($0.75), Missouri ($1.32), Nebraska ($1.10), and South Dakota ($1.53).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

 

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