Budget & Tax
Iowa is cutting its personal income tax
April 24, 2025
Curtis Shelton
Iowa didn’t start cutting its income tax until 2019, but over the last five years it cut its top personal income tax rate from 8.98 percent to 5.7 percent in 2024. That’s a 36.5 percent decrease.
Even so, state revenues have grown by 13.3 percent since 2015.
Sources: Iowa Annual Comprehensive Financial Report; Federal Reserve Bank of St. Louis; CPI inflation calculator
Even when you exclude federal funding, revenues grew by 4.6 percent in just over a decade when adjusting for inflation and population growth.
The tax cuts didn’t stop in 2024, either. After building up reserve funds to a total of $6 billion, Iowa enacted a flat income tax rate of 3.8 percent for 2025, with the intention of using some of that surplus revenue to offset any short-term declines in revenue.