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
    (E-10 to E-14)
    Tax Rate
    Ethanol
    (E-15+)
    Tax Rate
    Ethanol
    (E-85)
    Tax Rate
    Diesel
    Tax Rate
    Biodiesel (B11+)
    Tax Rate
    1925 $0.020 NA NA NA $0.020 NA
    1943 $0.030 NA NA NA $0.030 NA
    1945 $0.040 NA NA NA $0.040 NA
    1953 $0.050 NA NA NA $0.050 NA
    1955 $0.060 NA NA NA $0.060 NA
    1957 $0.070 NA NA NA $0.070 NA
    1965 $0.070 NA NA NA $0.080 NA
    1978 $0.085 NA NA NA $0.100 NA
    1981 $0.130 NA NA NA $0.135 NA
    1982 $0.130 NA NA NA $0.155 NA
    July 1, 1985 $0.150 NA NA NA $0.165 NA
    January 1, 1986 $0.160 NA NA NA $0.170 NA
    1987 $0.160 NA NA NA $0.185 NA
    1988 $0.180 NA NA NA $0.205 NA
    1989 $0.200 NA NA $0.190 $0.225 NA
    July 1, 2002 $0.201 NA NA $0.190 $0.225 NA
    July 1, 2003 $0.203 NA NA $0.190 $0.225 NA
    July 1, 2004 $0.205 NA NA $0.190 $0.225 NA
    July 1, 2005 $0.207 NA NA $0.190 $0.225 NA
    January 1, 2006 $0.207 NA NA $0.190 $0.225 NA
    July 1, 2006 $0.210 NA NA $0.190 $0.225 NA
    July 1, 2007 $0.207 NA NA $0.190 $0.225 NA
    July 1, 2008 $0.210 NA NA $0.190 $0.225 NA
    March 1, 2015 $0.310 NA NA $0.290 $0.325 NA
    July 1, 2015 $0.308 NA NA $0.293 $0.325 $0.295
    July 1, 2016 $0.307 NA NA $0.290 $0.325 $0.295
    July 1, 2017 $0.305 NA NA $0.290 $0.325 $0.295
    July 1, 2018 $0.307 NA NA $0.290 $0.325 $0.295
    July 1, 2019 $0.305 NA NA $0.290 $0.325 $0.295
    July 1, 2020 $0.300 $0.300 $0.240 NA $0.325 $0.301
    July 1, 2021 $0.300 $0.300 $0.240 NA $0.325 $0.304

    All rates are cents per gallon

    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.