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Iowa Personal Income Tax Laws

As they say, nothing is as certain as death and taxes. In Iowa, that means paying not only a federal income tax, but also a state personal income tax. Chances are, if you live or work in Iowa, you pay the state income tax. As bad a rap as taxes get, they do cover many essential government functions, such as schools, highway maintenance, and police officers.

If you’re tempted to not pay your state or federal taxes, please understand that intentional non-payment or underpayment can have serious consequences, from a 10% penalty for non-timely payment to a criminal fraud conviction. Not paying the taxes you owe is a crime called tax fraud or tax evasion. If you suspect a person or business is committing tax fraud, you can report it online to the Iowa Department of Revenue.

The chart below details the main provisions of the personal income tax laws in Iowa.

Code Sections Iowa Code Chapter 422 – Individual Income, Corporate, and Franchise Taxes
Who is Required to File? Almost everyone must file a state income tax return in Iowa, including:
  • Residents with at least $9,000 in net income for individuals or $13,500 for married taxpayers
  • Part-year residents (for the part of the year they resided in Iowa)
  • Non-residents with income in Iowa (except for Illinois residents as Iowa and Illinois have a reciprocal agreement where residents who live in one state and work in the other only pay income tax in the state they live in)
  • Estates and trusts

Note that seniors 65 years of age or older can file for a tax exemption if they have $32,000 or less in income if married or $24,000 or less if single.

Tax Rate The Iowa individual income tax is a progressive tax that’s based of the amount of income you earn. You pay a certain amount of tax for the first $X amount of dollars under each bracket, until you reach the final bracket that your income falls into.

The rates for both single and married couple filers for 2015 are:
  • For the first $1,539 – .36%
  • For the next $1,539 – .72%
  • For the next $3,078 – 2.43%
  • For the next $7,695 – 4.50%
  • For the next $9,234 – 6.12%
  • For the next $7,695 – 6.48%
  • For the next $15,390 – 6.80%
  • For the next $23,085 – 7.92%
  • For anything over $69,255 – 8.98%
Federal Income Tax Deductible Yes, you can deduct all the federal income taxes you paid during the year.
Federal Income Tax Used as Basis Yes, Iowa uses the federal income tax as a basis and uses the same Internal Revenue Code rules to determine things like income.

If you have questions about your Iowa state income tax, or you encounter difficulty with the Iowa Department of Revenue, you should talk to an experienced local tax lawyer.

Note: State and federal tax laws change frequently. It’s best to verify these income tax laws by contact an attorney or conduct your own legal research to verify the state law(s) you are researching.

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