Iowa Tax Rate History | Iowa Department of Revenue

The first major State tax in Iowa was created in 1921 when the General Assembly passed a 2¢ per package tax on cigarettes. Iowa was the first state to pass a cigarette tax. In 1934 the sales and income taxes were created as property tax relief measures.

Since that time several significant changes have occurred, both in the tax base and in the tax rates of Iowa’s major revenue sources. While certain changes in a particular tax base may be of equal or greater importance than changes in the tax rate, the history of the key developments in a particular tax may often be identified through an examination of tax rate changes. Additional information may be obtained by contacting the Research and Policy Division of the Director’s Office.

Tax rate history is provided for the following tax types:

Individual Income Tax
Corporation Income Tax
Sales and Use Tax
Cigarette Tax
Tobacco Products Tax
Fuel Tax

History of Iowa Individual Income Tax Rates and Brackets

Effective Tax Year	Rates and Income Tax Brackets
1934	Graduated rates imposed ranging from 1.0% to 5.0% over 5 taxable income brackets with a top bracket of $4,000
1953	Rates lowered to range from 0.75% to 3.75% over 5 taxable income brackets with top bracket raised to $5,000
1955	Rates increased to range from 0.8% to 4.0% over 5 taxable income brackets with the top bracket lowered to $4,000
1957	Rates lowered to range from 0.75% to 3.75% over the same taxable income brackets
1965	Rate changed to range from 0.75% to 4.5% over 6 taxable income brackets with the top bracket of $9,000
1967	Additional bracket and new top 5.25% rate introduced.
1971	Rates increased on all brackets except lowest two, rates ranging from 0.75% to 7.0%
1975	Rates ranging from 0.5% to 13.0% over 13 taxable income brackets with the top bracket of $75,000
1979	One-time indexation of brackets, raising top bracket to $76,725
1987	Rates changed to 0.4% to 9.98% over 9 taxable income brackets with the top bracket of $45,000
1996	Annual indexation of brackets instituted
1998	All tax rates cut 10% with a range of 0.36% through 8.98% over 9 taxable income brackets with the top bracket of $45,000 indexed ($51,660)
2019	All tax rates cut with a range of 0.33% through 8.53% over 9 taxable income brackets with a top bracket of $73,710 (indexed annually)

History of Iowa Corporation Income Tax Rates and Brackets

Effective Tax Year	Rates and Income Tax Brackets
1934	Flat rate of 2.0%
1955	Rate increased to 3.0%
1957	Rate lowered to 2.0%
1959	Rate increased to 3.0%
1965	Rate increased to 4.0%
1967	Additional rates increased with 3 taxable income brackets: Up to $25,000 – 4.0% $25,000 to $100,000 – 6.0% Over $100,000 – 8.0%
1971	Up to $25,000 – 6.0% $25,000 to $100,000 – 8.0% Over $100,000 – 10.0%
1981	Up to $25,000 – 6.0% $25,000 to $100,000 – 8.0% $100,000 to $250,000 – 10.0% Over $250,000 – 12.0%
Effective 2021	Up to $100,000 – 5.5% $100,000 to $250,000 – 9.0% Over $250,000 – 9.8%

History of Iowa Sales and Use Tax Rates

Effective Date of Change	Sales and Use Tax Rate
April 1, 1934	2.0%
July 1, 1955	2.5%
July 1, 1957	2.0%
October 1, 1967	3.0%
March 1, 1983	4.0%
July 1, 1992	5.0%
July 1, 2008	6.0%

History of Iowa Cigarette Tax Rates

Effective Date of Change	Sales and Use Tax Rate
April 11, 1921	2 cents per package
1953	3 cents per package
1959	4 cents per package
1963	5 cents per package
1965	8 cents per package
1967	10 cents per package
1971	13 cents per package
1981	18 cents per package
1985	26 cents per package
1988	34 cents per package
1989	31 cents per package
1991	36 cents per package
March 16, 2007	$1.36 per package

History of Iowa Tobacco Tax Rates

Effective Date of Change	Tobacco Tax Rate
1967	10% of wholesale
1985	15% of wholesale
1988	19% of wholesale
1991	22% of wholesale
March 16, 2007	Cigars: $.50 or 50% per cigar, whichever is lower Snuff: $1.19 per ounce All other OTP products: 50% of wholesale

History of Iowa Fuel Tax Rates

Effective Date of Change	Gasoline Tax Rate	Ethanol (E-10 to E-14) Tax Rate	Ethanol (E-15+) Tax Rate	Ethanol (E-85) Tax Rate	Diesel Tax Rate	Biodiesel (B-11+) Tax Rate	Electric Fuel
1925	$0.020	NA	NA	NA	$0.020	NA	N/A
1943	$0.030	NA	NA	NA	$0.030	NA	N/A
1945	$0.040	NA	NA	NA	$0.040	NA	N/A
1953	$0.050	NA	NA	NA	$0.050	NA	N/A
1955	$0.060	NA	NA	NA	$0.060	NA	N/A
1957	$0.070	NA	NA	NA	$0.070	NA	N/A
1965	$0.070	NA	NA	NA	$0.080	NA	N/A
1978	$0.085	NA	NA	NA	$0.100	NA	N/A
1981	$0.130	NA	NA	NA	$0.135	NA	N/A
1982	$0.130	NA	NA	NA	$0.155	NA	N/A
July 1, 1985	$0.150	NA	NA	NA	$0.165	NA	N/A
January 1, 1986	$0.160	NA	NA	NA	$0.170	NA	N/A
1987	$0.160	NA	NA	NA	$0.185	NA	N/A
1988	$0.180	NA	NA	NA	$0.205	NA	N/A
1989	$0.200	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2002	$0.201	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2003	$0.203	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2004	$0.205	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2005	$0.207	NA	NA	$0.190	$0.225	NA	N/A
January 1, 2006	$0.207	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2006	$0.210	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2007	$0.207	NA	NA	$0.190	$0.225	NA	N/A
July 1, 2008	$0.210	NA	NA	$0.190	$0.225	NA	N/A
March 1, 2015	$0.310	NA	NA	$0.290	$0.325	NA	N/A
July 1, 2015	$0.308	NA	NA	$0.293	$0.325	$0.295	N/A
July 1, 2016	$0.307	NA	NA	$0.290	$0.325	$0.295	N/A
July 1, 2017	$0.305	NA	NA	$0.290	$0.325	$0.295	N/A
July 1, 2018	$0.307	NA	NA	$0.290	$0.325	$0.295	N/A
July 1, 2019	$0.305	NA	NA	$0.290	$0.325	$0.295	N/A
July 1, 2020	$0.300	$0.300	$0.240	N/A	$0.325	$0.301	N/A
July 1, 2021	$0.300	$0.300	$0.240	N/A	$0.325	$0.304	N/A
July 1, 2022	$0.300	$0.300	$0.240	N/A	$0.325	$0.301	N/A
July 1, 2023	$0.300	$0.300	$0.245	N/A	$0.325	$0.298	$0.026 per kWh

All rates are cents per gallon unless otherwise noted.

The Ethanol Blended Gasoline E-15 or Higher is a new fuel group effective 7/1/20.

The Ethanol Blended Gasoline E-85 fuel group should not be used for transactions occurring 7/1/20 and after. These fuels will be reported in the new Ethanol Blended Gasoline E-15 or Higher fuel group and taxed at the E-15 or Higher rate.

January 1, 2006 through July 1, 2007, the Fuel Tax Rate for E-85 was 17 cents per gallon.