Iowa

Iowa's personal income tax schedule has nine brackets, and in 2002 there were reductions in all nine, the lowest bracket lowered from 0.4% to 0.36%, and the highest from 9.98% to 8.98%. Federal personal income taxes are deductible from the state taxes. Iowa's corporate income tax has four brackets, ranging from 6% on the first $25,000 of net income to 12% on amounts over $250,000. 50% of federal corporate taxes paid are deductible. Iowa's retail sales tax is 5%, with exemptions for basic foods and prescription drugs. Some local governments have local-option sales taxes of up to 2%. There are also state excise taxes on motor fuels, tobacco products, amusements, parimutuels, insurance premiums, and other selected items. The state directly controls alcohol sales. Iowa's estate tax, with maximum rate of 15%, is independent of the federal tax credit for state estate taxes, and is unaffected by the latter's scheduled phase-out by 2007. Iowa's inheritance tax ranges from 1% to 15% depending on both the amount of the inheritance and the relationship to the recipient. State gift and death taxes accounted for 1.6% of state tax collections in 2002. Other state taxes include license fees and stamp taxes. Property taxes are all local. Localities collect over 40% of the taxes in Iowa.

Total state tax collections in Iowa came to just over $5 billion in 2002, 35.3% generated by the state income tax, 34.9% by the state sales tax, 15.8% by state excise taxes, 10.4% by state license fees, and 1.7% by the state corporate income tax. Combined state and local taxes in Iowa amounted to about 9.5% of income in 2003, placing the state in the middle (26th) in terms of tax burden.

The following table from the US Census Bureau provides a summary of taxes collected by the state in 2002.