How does Iowa’s tax code compare? Iowa has a graduated state individual income tax, with rates ranging from 4.40 percent to 5.70 percent. There are also jurisdictions that collect local income taxes. Iowa has a graduated corporate income tax, with rates ranging from 5.5 percent to 7.1 percent. Iowa also has 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 1.40 percent effective property tax rate on owner-occupied housing value.
Iowa has an inheritance tax. Iowa has a 30 cents per gallon gas tax rate and a $1.36 cigarette excise tax rate. The State of Iowa collects $5,926 in state and local tax collections per capita. Iowa has $6,972 in state and local debt per capita and has a 90 percent funded ratio of public pension plans. Iowa’s tax system ranks 20th overall on the 2025 State Tax Competitiveness Index.
Each state’s tax code is a multifaceted system with many moving parts, and Iowa is no exception. The first step towards understanding Iowa’s tax code is knowing the basics. How does Iowa collect tax revenue? Click the tabs below to learn more! You can also explore our state tax maps, which are compiled from our annual publication, Facts & Figures 2024: 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.
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Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
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Retail sales taxes are an essential part of most states’ revenue toolkits, responsible for 32 percent of state tax collections and 13 percent of local tax collections (24 percent of combined collections).
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Graduated corporate rates are inequitable—that is, the size of a corporation bears no necessary relation to the income levels of the owners.
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