Iowa's income tax rate is dropping to 3.8%. See how that stacks up against other states

Stephen Gruber-Miller, Des Moines Register

Iowans will see a smaller tax bill beginning next year, when the state transitions to a 3.8% flat income tax.

Gov. Kim Reynolds will sign legislation Wednesday implementing the new tax rate beginning in 2025.

Iowa's top income tax rate this year is 5.7%. The state was already transitioning to a 3.9% flat tax by 2026 under a law Reynolds signed two years ago. The new law speeds up that process and slightly lowers the rate.

The law will give Iowa the sixth-lowest income tax rate in the country. Nine states have no income tax for individuals.

How does Iowa's individual income tax rate compare with other states?

Here are the top individual income tax rates by state as of March 15, according to the Tax Foundation.

In many states with a graduated income tax system, only the highest earners pay the top rate, while others pay less depending on their income levels. For example, California's top rate of 13.3% applies only to individuals earning $1 million or more, while New York's top rate of 10.9% applies only to those earning $25 million or more.

Some states, like Iowa, have additional tax cuts that will phase in over future years. Those cuts are not reflected in this year's rates.

  • Alaska: None

  • Florida: None

  • Nevada: None

  • New Hampshire: None (there is a 3% tax on interest and dividends)

  • South Dakota: None

  • Tennessee: None

  • Texas: None

  • Washington: None (there is a 7% tax on capital gains income)

  • Wyoming: None

  • Arizona: 2.5%

  • North Dakota: 2.5%

  • Indiana: 3.05%

  • Pennsylvania: 3.07%

  • Ohio: 3.5%

  • Iowa: 3.8% (2025 rate)

  • Kentucky: 4%

  • Louisiana: 4.25%

  • Michigan: 4.25%

  • Arkansas: 4.4%

  • Colorado: 4.4%

  • North Carolina: 4.5%

  • Utah: 4.55%

  • Mississippi: 4.7%

  • Oklahoma: 4.75%

  • Missouri: 4.8%

  • Illinois: 4.95%

  • Alabama: 5%

  • West Virginia: 5.12%

  • Georgia: 5.49%

  • Iowa: 5.7% (2024 rate)

  • Kansas: 5.7%

  • Maryland: 5.75%

  • Virginia: 5.75%

  • Idaho: 5.8%

  • Nebraska: 5.84%

  • Montana: 5.9%

  • New Mexico: 5.9%

  • Rhode Island: 5.99%

  • South Carolina: 6.4%

  • Delaware: 6.6%

  • Connecticut: 6.99%

  • Maine: 7.15%

  • Wisconsin: 7.65%

  • Vermont: 8.75%

  • Massachusetts: 9%

  • Minnesota: 9.85%

  • Oregon: 9.9%

  • New Jersey: 10.75%

  • Washington, D.C.: 10.75%

  • New York: 10.9%

  • Hawaii: 11%

  • California: 13.3%

Des Moines Register Data Visualization Specialist Tim Webber contributed to this article.

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at sgrubermil@registermedia.com or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.

This article originally appeared on Des Moines Register: Iowa's income tax drops to 3.8%. How that ranks with other states.

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