Iowa Tax Rate History

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
  • 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)

     

  • 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%

     

  • 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%

     

     

     

  • 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
  • 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

     

  • Effective Date of Change Gasoline Tax Rate Ethanol Tax Rate Diesel Tax Rate Biodiesel (B11+) Tax Rate
    1925 2 cents per gallon NA 2 cents per gallon NA
    1943 3 cents per gallon NA 3 cents per gallon NA
    1945 4 cents per gallon NA 4 cents per gallon NA
    1953 5 cents per gallon NA 5 cents per gallon NA
    1955 6 cents per gallon NA 6 cents per gallon NA
    1957 7 cents per gallon NA 7 cents per gallon NA
    1965 7 cents per gallon NA 8 cents per gallon NA
    1978 8.5 cents per gallon NA 10 cents per gallon NA
    1981 13 cents per gallon NA 13.5 cents per gallon NA
    1982 13 cents per gallon NA 15.5 cents per gallon NA
    July 1, 1985 15 cents per gallon NA 16.5 cents per gallon NA
    January 1, 1986 16 cents per gallon NA 17 cents per gallon NA
    1987 16 cents per gallon NA 18.5 cents per gallon NA
    1988 18 cents per gallon NA 20.5 cents per gallon NA
    1989 20 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2002 20.1 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2003 20.3 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2004 20.5 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2005 20.7 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    January 1, 2006 20.7 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2006 21 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2007 20.7 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    July 1, 2008 21 cents per gallon 19 cents per gallon 22.5 cents per gallon NA
    March 1, 2015 31 cents per gallon 29 cents per gallon 32.5 cents per gallon NA
    July 1, 2015 30.8 cents per gallon 29.3 cents per gallon 32.5 cents per gallon 29.5 cents per gallon
    July 1, 2016 30.7 cents per gallon 29 cents per gallon 32.5 cents per gallon 29.5 cents per gallon
    July 1, 2017 30.5 cents per gallon 29 cents per gallon 32.5 cents per gallon 29.5 cents per gallon
    July 1, 2018 30.7 cents per gallon 29 cents per gallon 32.5 cents per gallon 29.5 cents per gallon
    July 1, 2019 30.5 cents per gallon 29 cents per gallon 32.5 cents per gallon 29.5 cents per gallon

    January 1, 2006 through July 1, 2007, the Fuel Tax Rate for E85 was 17 cents per gallon.