Having trouble viewing this email? View it as a Web page . IDR Announces 2024 Individual Income Tax Brackets and Interest Rates Contact: John Fuller, Public Information Officer Iowa Department of Revenue (515) 318-8864 john.fuller@iowa.gov October 25, 2023 – The Iowa Department of Revenue has finalized individual income tax brackets for the 2024 tax year (applicable for taxes due in 2025) and the 2024 interest rate, which the agency charges for overdue payments. Individual Income Tax Brackets Iowa law provides for the indexation of individual income tax brackets each year. This is done by applying inflation factors to, or “indexing,” the previous year’s levels. Iowa Code sections 422.4 and 422.5 define procedures for the calculation of inflation factors and the indexation of income tax brackets. Indexation is meant to protect taxpayers from paying higher income taxes solely as a result of inflation. Tax year 2024 Iowa income tax brackets are shown in the tables below. Iowa Code provides for two separate sets of individual income tax brackets; one set of brackets for married taxpayers filing jointly and another set for all other taxpayers. In each of these sets, there will be three brackets in tax year 2024. Under current law, Iowa will phase down over the next two years to a single tax rate for all taxpayers; there will be two brackets in 2025 with a top rate of 4.82 percent and a single flat rate of 3.9 percent for all levels of income effective with tax year 2026. For married taxpayers filing jointly: Taxable Income Tax Over But Not Over Tax Rate Of Excess Over $0 $12,420 $0.00 + (4.40% x $0) $12,420 $62,100 $546.48 + (4.82% x $12,420) $62,100 --- $2,941.06 + (5.70% x $62,100) For all taxpayers other than married taxpayers filing jointly: Taxable Income Tax Over But Not Over Tax Rate Of Excess Over $0 $6,210 $0.00 + (4.40% x $0) $6,210 $31,050 $273.24 + (4.82% x $6,210) $31,050 --- $1,470.53 + (5.70% x $31,050) Iowa Department of Revenue Interest Rate Starting January 1, 2024, the interest rate for taxpayers with overdue payments will be: 10.0% annually 0.8% monthly 0.027322% 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 7.78 percent over the past twelve months. Rounded to the nearest whole percent, this average is 8.0 percent. Adding two percentage points results in the annual Department rate of 10.0 percent. The monthly rate is the annual rate divided by 12, rounded to the nearest one-tenth of a percentage point. The daily rate for 2024, which is a leap year, is the annual rate divided by 366. The average monthly bank prime rate is published by the United States Federal Reserve . The statutory mission of the Iowa Department of Revenue is to serve Iowans and support state government by collecting all taxes required by law, but no more.

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Wednesday, October 16, 2024

Press Release

The Iowa Department of Revenue announces the 2025 tax year individual income tax rate and the 2025 interest rate, which the agency charges for overdue payments.

Since the enactment of Iowa Senate File 2442 in May, 2024, Iowa law provides for a flat tax rate of 3.8 percent for all levels of taxable individual income beginning with tax year 2025. There will be no income tax brackets in 2025.