IDR announces 2019 Interest Rates, Standard Deductions, Income Tax Brackets
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Des Moines, Iowa –The Iowa Department of Revenue has announced the 2019 interest rate, individual income tax brackets, and standard deduction amounts for the 2019 tax year (applicable for taxes due in 2020).
Interest Rates
The 2019 Department interest rate calculation is now final. Starting January 1, 2019, the interest rate for taxpayers with overdue payments will be:
- 7.0% annually
- 0.6% monthly
- 0.019178% daily
Iowa Code Section 421.7 specifies the procedures for calculating the Department’s annual and monthly interest rates. The annual rate is based on the average monthly prime rate during the preceding twelve month period, October through September. Iowa law requires that this average be rounded to the nearest whole percent and two percentage points to be added to it. The prime rate averaged 4.66 percent over the past twelve months. Rounded to the nearest whole percent, this average is 5.0 percent. Adding two percentage points results in the annual Department rate of 7.0 percent. The monthly rate is the annual rate divided by 12, rounded to the nearest one-tenth of a percentage point.
Standard Deductions
The tax year 2019 standard deductions are:
- $2,080 for single taxpayers
- $2,080 for married taxpayers filing separately
- $5,120 for married filing jointly
Individual Income Tax Brackets
Tax year 2019 income tax brackets are shown in the table below. Tax year 2019 income tax rates are lower than in 2018. The lowering of rates is following Senate File 2417, an extensive state tax reform bill that was signed into law by Iowa Governor Kim Reynolds on May 30, 2018.
| Taxable Income | Tax | |||||
| Over | But Not Over |
Tax Rate | Of Excess Over |
|||
| $0 | $1,638 | $0.00 | +(0.33% | x | $0) | |
| $1,638 | $3,276 | $5.41 | +(0.67% | x | $1,638) | |
| $3,276 | $6,552 | $16.38 | +(2.25% | x | $3,276) | |
| $6,552 | $14,742 | $90.09 | +(4.14% | x | $6,552) | |
| $14,742 | $24,570 | $429.16 | +(5.63% | x | $14,742) | |
| $24,570 | $32,760 | $982.48 | +(5.96% | x | $24,570) | |
| $32,760 | $49,140 | $1,470.60 | +(6.25% | x | $32,760) | |
| $49,140 | $73,710 | $2,494.35 | +(7.44% | x | $49,140) | |
| $73,710 | $4,322.36 | +(8.53% | x | $73,710) | ||
Indexation of the standard deductions is covered in Iowa Code sections 422.9 and 422.21. Iowa Code section 422.5 details indexation of Iowa income tax brackets.
Iowa law provides for the indexation of individual income tax brackets and standard deduction amounts. These tax features are determined each year by applying inflation factors to, or “indexing,” the previous year’s amounts. Indexation is meant to protect taxpayers from paying higher income taxes solely as a result of inflation.