Iowa
Our ranking: Mixed tax picture
State income tax: 0.36% (on up to $1,598 of taxable income) — 8.98% (on taxable income over $71,910)
Average state and local sales taxes: 6.82%
Gas taxes and fees: 31 cents per gallon
In the wake of the new federal tax law, Iowa has done a bit of tax reform of its own. For 2019, the changes are relatively modest:
An across-the-board rate reduction that reduces the top rate from 8.98% to 8.53%A “decoupling” from federal law that means Iowans won’t be limited in how much local property taxes can be deducted from state returns.
In 2023, assuming state revenues hold up, income taxes will be further reduced, the alternative minimum tax repealed, and the Hawkeye State’s uncommon practice of allowing residents to deduct federal taxes from their state taxes will be repealed. Iowa allows school districts to tax income as well. The average levy statewide is 0.22%, according to the Tax Foundation.
