On the heels of the federal tax overhaul, Iowa is looking to cut some taxes of its own. Governor Kim Reynolds recently signed a bill that would lower Iowa state income taxes by more than $2 billion over the next six years.
Lawmakers approved the bill earlier in May and the governor signed the bill this past Wednesday. So, how much will your Iowa state income taxes be dropping? Well, that depends.
The total reduction will amount to an average of roughly $300 per person. However, the results will vary based on earnings. From the Desmoine Register:
- Filers with adjusted gross incomes of $10,001 to $20,000 will see the largest percentage cut: Their tax liability is expected to decrease 51.8 percent. But that’s only an average savings of $18 per year.
- Filers whose income falls between $50,001 and $60,000 should see an average savings of 7.8 percent. That could mean an average tax cut of $156.
- Filers whose adjusted gross income is more than $1 million per year will see a 19.4 percent savings. That would equal a savings of $24,636 on average.
As with the federal tax overhaul, most people will see a reduction in their taxes. However, the Iowa state bill does more than just cut Iowa state income taxes. It raises others.
What Taxes Are Going Up?
The bill includes provisions for Iowa to collect state sales tax on video streaming services (like Netflix), digital video rentals (Like through Amazon Prime), ride share services (such as Uber and Lyft), and taxis. Officials argue those moves will modernize the tax code and provide parity between online and brick-and-mortar retailers.
While it seems likely that most Iowans will have an easier tax burden, the full results will not be known until next tax season.
Is Iowa A High Tax State?
Iowa is not known as a high-tax state, although it does rank 14th on WalletHub’s list of most tax-burdened states. The reduction in Iowa state income taxes may be enough to knock it a few numbers down the list. Only time will tell.
For now, you could do a lot worse than move to Iowa. But maybe you could do a lot better? There’s only one way to find out and that’s by downloading City vs City.
City vs City is the first cost of living calculator that uses real, local data curated at the zip code level for accurate results. The app factors in housing and transportation costs, state and local taxes, and more.
As a result, you’ll see a clear picture of the current cost of living in your city. What’s more, you can also compare your costs with another city of your choosing. Stack your two cities side by side and see which one has a better cost of living situation.
City vs City is a powerful tool for anyone considering a move. Get a detailed look at how your cost of living will change in a new city with City vs City.