Iowa has a flat 3.80 percent individual income tax rate. Iowa has a graduated corporate income tax, with rates ranging from 5.5 percent to 7.1 percent, a 6.00 percent state sales tax rate, and an average combined state and local sales tax rate of 6.94 percent. Iowa has a 1.33 percent effective property tax rate on owner-occupied housing value. Iowa does not have an estate tax or inheritance tax. Iowa’s gas tax is 30 cents per gallon, and its cigarette excise tax is $1.36 per pack of 20 cigarettes.
Iowa raises tax revenue primarily through property taxes (32.3 percent of total state and local tax revenue), general sales taxes (25.0 percent), and individual income taxes (22.9 percent). Iowa collects $6,471 in state and local tax collections per capita, carries $7,306 in state and local debt per capita, and has a 93 percent funded ratio of public pension plans. Iowa’s tax system ranks 17th overall on the 2026 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Iowa is no exception. Use the tabs below to compare Iowa taxes with other states and to see how Iowa raises tax revenue. You can also browse our tax maps, which are compiled from our annual publication, Facts & Figures 2026: How Does Your State Compare?
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The State Tax Competitiveness Index enables policymakers, taxpayers, and business leaders to gauge how their states’ tax systems compare. While there are many ways to show how much state governments collect in taxes, the Index evaluates how well states structure their tax systems and provides a road map for improvement.
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Facts & Figures serves as a one-stop state tax data resource that compares all 50 states on over 40 measures of tax rates, collections, burdens, and more.
2 min read
Individual income taxes are a major source of state government revenue, accounting for more than a third of state tax collections. How do income taxes compare in your state?
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for nearly a quarter of combined state and local tax collections.
18 min read
Forty-four states levy a corporate income tax, with top rates ranging from a 2 percent flat rate in North Carolina to an 11.5 percent top marginal rate in New Jersey. Four states—Georgia, Nebraska, North Carolina, and Pennsylvania—reduced their corporate income tax rates effective January 1, 2026.
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Property taxes are the primary tool for financing local governments. While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services.
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New Jersey levies the highest top statutory corporate tax rate at 11.5 percent, followed by Minnesota (9.8 percent) and Illinois (9.50 percent). Alaska and Pennsylvania levy top statutory corporate tax rates of 9.40 percent and 8.99 percent, respectively.
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On the heels of adopting one of the most comprehensive state tax reform packages in years, Iowa lawmakers are back in Des Moines with property tax relief in their sights. But while the issue is worthy of their attention, House File 1 (HF 1) as currently drafted misses the mark.
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The pandemic has accelerated changes to the way we live and work, making it far easier for people to move—and they have. As states work to maintain their competitive advantage, they should pay attention to where people are moving, and try to understand why.
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Most of the 2023 state tax changes represent net tax reductions, the result of an unprecedented wave of rate reductions and other tax cuts in the past two years as states respond to burgeoning revenues, greater tax competition in an era of enhanced mobility, and the impact of high inflation on residents.
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While the wireless market has become increasingly competitive in recent years, resulting in steady declines in the average price for wireless services, the price reduction for consumers has been partially offset by higher taxes.
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The logic that has prevailed for local sales taxes should apply equally to other taxes that localities impose on multijurisdictional businesses, including local tourism taxes. The evidence is clear that central administration of local taxes reduces compliance costs without sacrificing local revenue.
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People respond to incentives. As tax rates increase or products are banned from sale, consumers and producers search for ways around these penalties and restrictions.
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In times of high inflation, states should consider adopting permanent full expensing because it boosts long-run productivity, economic output, and wages.
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All corporate income taxes fall on capital investment, but the structure should not make matters worse, and policymakers should take care not to distort investment decisions through the use of targeted incentives for select firms or activities instead of a lower rate for all businesses.
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Remote and flexible work opportunities are here to stay, whether states like it or not. With enhanced opportunities to take their job with them wherever they please, more workers can factor tax burdens into their decision of where to live.
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