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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 Tax Research and Program Analysis Section 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)


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%


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

Cigarette 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 Tax Rate

Diesel Tax Rate

1925

2 cents per gallon

NA

2 cents per gallon

1943

3 cents per gallon

NA

3 cents per gallon

1945

4 cents per gallon

NA

4 cents per gallon

1953

5 cents per gallon

NA

5 cents per gallon

1955

6 cents per gallon

NA

6 cents per gallon

1957

7 cents per gallon

NA

7 cents per gallon

1965

7 cents per gallon

NA

8 cents per gallon

1978

8.5 cents per gallon

NA

10 cents per gallon

1981

13 cents per gallon

NA

13.5 cents per gallon

1982

13 cents per gallon

NA

15.5 cents per gallon

July 1, 1985

15 cents per gallon

NA

16.5 cents per gallon

January 1, 1986

16 cents per gallon

NA

17 cents per gallon

1987

16 cents per gallon

NA

18.5 cents per gallon

1988

18 cents per gallon

NA

20.5 cents per gallon

1989

20 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2002

20.1 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2003

20.3 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2004

20.5 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2005

20.7 cents per gallon

19 cents per gallon

22.5 cents per gallon

January 1, 2006

20.7 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2006

21 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2007

20.7 cents per gallon

19 cents per gallon

22.5 cents per gallon

July 1, 2008

21 cents per gallon

19 cents per gallon

22.5 cents per gallon

March 1, 2015

31 cents per gallon

29 cents per gallon

32.5 cents per gallon

July 1, 2015

30.8 cents per gallon

29.3 cents per gallon

32.5 cents per gallon

July 1, 2016

30.7 cents per gallon

29 cents per gallon

32.5 cents per gallon

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