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Iowa Department of Revenue announces 2017 numbers

Contact Email: 
Phone: 
515-281-8450
Date: 
Wednesday, October 19, 2016

DES MOINES – The Iowa Department of Revenue (IDR) today announced that the annual interest rate for overdue taxes and refunds in 2017 will be 5 percent and the monthly interest rate will be 0.4 percent. IDR calculates and publishes the statutory annual and monthly interest rates each year in October.  Also at this time IDR determines and sets forth the standard deduction amounts and tax brackets for the 2017 tax year. 

Iowa Code section 421.7 dictates how the annual interest rate for taxes is to be calculated.  Each year, that rate is based on the average prime rate charged by banks on short-term business loans over the past year. For example, the 2017 interest rate is based upon short-term business loans made between October 2015 and September 2016. The Code then requires that two percentage points be added to this average, with the final value rounded to the nearest whole percent. The average prime rate in each of the months between October 2015 and September 2016 varied from 3.25 to 3.5 percent. The overall average prime rate during this period was 3.45 percent.  To calculate the Department interest rate, this average is rounded to the nearest whole percentage, or 3.0 percent, and 2 percentage points are added.  As such, the annual interest rate is 5 percent.  The Department interest rate has not changed since 2010.  The 2017 rates are effective January 1, 2017 through December 31, 2017 for taxes which are overdue and for late refunds payable during this time.

IDR has also determined the standard deduction amounts and tax brackets for the 2017 tax year, for income taxes due and payable in calendar year 2018.  These amounts are determined each year by applying inflation factors to, or “indexing,” the previous year’s amounts. Indexing the prior year’s amounts is intended to prevent taxpayers from paying higher income taxes that may result solely from inflationary impacts on incomes. Indexation of the standard income tax deductions is covered in Iowa Code sections 422.9 and 422.21. The 2017 standard deduction for single taxpayers or married taxpayers filing separately will be $2,000.  The 2017 standard deduction for married filing jointly taxpayers will be $4,920.

Code section 422.5 details indexation of Iowa income tax brackets. The 2017 income tax brackets are shown below.

 

 

 

 

 

 

 

 

 

Taxable Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over

 

But Not Over

 

 

 

 

Tax Rate

 

Of Excess Over

 

 

 

 

 

 

 

 

 

 

 

 

$0

 

$1,573

 

$0.00

+

(

0.36%

x

$0

)

$1,573

 

$3,146

 

$5.66

+

(

0.72%

x

$1,573

)

$3,146

 

$6,292

 

$16.99

+

(

2.43%

x

$3,146

)

$6,292

 

$14,157

 

$93.44

+

(

4.50%

x

$6,292

)

$14,157

 

$23,595

 

$447.37

+

(

6.12%

x

$14,157

)

$23,595

 

$31,460

 

$1,024.98

+

(

6.48%

x

$23,595

)

$31,460

 

$47,190

 

$1,534.63

+

(

6.80%

x

$31,460

)

$47,190

 

$70,785

 

$2,604.27

+

(

7.92%

x

$47,190

)

$70,785

 

------

 

$4,472.99

+

(

8.98%

x

$70,785

)