Where Iowa Ranks on Taxes

Happy Tax Day, Iowa!

House Republicans have been working this session to reduce Iowan’s tax burden, simplify the tax code, and make it more fair for all taxpayers.

From the Des Moines Regsiter


Categories where Iowa places in the top half of states for highest taxes.

NO. 1 HIGHEST: Iowa’s corporate income tax system consists of four brackets, with rates of 6 to 12 percent. The top rate ranks highest among states levying a corporate income tax. But citing the top rate is misleading because what corporations actually pay — after deductions and credits that reduce the effective tax rates — is much lower than in other states, said Mike Owen, assistant director of the Iowa City-based Iowa Policy Project. Iowa tumbles to the bottom third of states when you look at corporate taxes collected per person. Iowa collected $82 a person in 2011, which ranked 14th lowest nationally.

4th HIGHEST: The personal income tax has a top rate of 8.98 percent. That’s fourth highest among states levying an individual income tax. This is also misleading, Owen said, because of deductions and credits that reduce effective tax rates. Iowa collected $933 per person in income taxes in 2011, which ranked 17th highest nationally.

4th HIGHEST: The tax on table wine is $1.75 per gallon. Kentucky is highest at $3.16. Several states charge no wine tax.

6th HIGHEST: The liquor tax is $12.99 per gallon. Washington is highest at $35.22. Vermont and New Hampshire are lowest with no liquor tax.

8th WORST: Iowa ranks in the bottom 10 when it comes to best business tax climate, based on corporate and individual income taxes, sales tax, unemployment insurance and property taxes. Wyoming, which has no corporate or individual income tax, has the best tax climate for business, followed by South Dakota, Nevada, Alaska and Florida.

16th HIGHEST: The state sales tax is 6 percent. Iowa claimed $730 per person in sales tax revenue in 2011, which was the 25th highest amount nationally.

16th HIGHEST: Altogether, state and local governments collected $8,593 in revenue per person in 2010. Tennessee took in the least, Alaska the most.

23rd HIGHEST: For property taxes, state and local governments collected $1,367 per person in 2010. Alabama is lowest. Wyoming is highest.

24th HIGHEST: Iowa’s cigarette tax stands at $1.36.


Categories where Iowa places in the top half of states for lowest taxes.

13th BEST: Iowans had to work 99 days in 2013 before they earned enough money to pay all federal, state, and local taxes for the year. Iowa’s “tax freedom day” of April 9 is earlier than 36 other states. Residents of Connecticut (May 13) and New York (May 6) have the highest tax burden, while Mississippi and Louisiana (both March 29) have the earliest tax freedom day.

14th LOWEST: State government debt per person in Iowa was $2,478 in 2011. Massachusetts was highest at $11,309. Tennessee was lowest at $925 per person.

16th LOWEST: The cellphone tax is 7.95 percent. Nebraska is highest at 18.67 percent. Oregon is lowest at 1.85 percent.

17th LOWEST: Iowa’s gasoline tax stands at 22 cents per gallon. Alaska has the lowest at 8 cents a gallon, and New York has the highest at 50.6 cents a gallon.

19th LOWEST: The beer tax is 19 cents per gallon. Tennessee’s is highest at $1.17 a gallon. Wyoming’s is lowest at 2 cents a gallon.