Iowa Tax Rate History

The first major state tax in Iowa was created in 1921 when the state passed a 2¢ per package tax on cigarettes. Iowa was the first state to pass a cigarette tax. In 1934 the sales and income taxes were created as property tax relief measures.

Since that time several significant changes have occurred, both in the tax base and in the tax rates of Iowa’s major revenue sources. While certain changes in a particular tax base may be of equal or greater importance than changes in the tax rate, the history of the key developments in a particular tax may often be identified through an examination of tax rate changes. Additional information may be obtained by contacting the Tax Research and Program Analysis Section of the Director’s Office.

Individual Income Tax Corporation Income Tax
Cigarette Tax Tobacco Products Tax
Sales and Use Tax Motor Fuel / Diesel Fuel Tax
Individual Income Tax
1934 tax enacted at 1% – 5%
1953 rate changed to .75% – 3.75%
1955 rate changed to .8% – 4%
1957 rate changed to .75% – 3.75%
1967 rate changed to .75% – 5.25%
1971 rate changed to .75% – 7%
1975 rate changed to .5% – 13%
1987 rate changed to .4% – 9.98%
1998 rate changed to .36% – 8.98%

 

Corporation Income Tax
1934 tax enacted at 2%
1955 rate changed to 3%
1957 rate changed to 2%
1959 rate changed to 3%
1965 rate changed to 4%
1967 rate changed to 4% – 8%
1971 rate changed to 6% – 10%
1981 rate changed to 6% – 12%

 

Sales and Use Tax
1934 sales tax enacted at 2%
1937 use tax enacted at 2%
1955 rate changed to 2.5%
1957 rate changed to 2%
1967 rate changed to 3%
1983 rate changed to 4%
1992
(July 1)
rate changed to 5%
2008
(July 1)
rate changed to 6%

 

Cigarette Tax
1921
(April 11)
tax enacted at 2¢ / package
1953 rate changed to 3¢ / package
1959 rate changed to 4¢ / package
1963 rate changed to 5¢ / package
1965 rate changed to 8¢ / package
1967 rate changed to 10¢ / package
1971 rate changed to 13¢ / package
1981 rate changed to 18¢ / package
1985 rate changed to 26¢ / package
1988 rate changed to 34¢ / package
1989 rate changed to 31¢ / package
1991 rate changed to 36¢ / package
2007
(March 16)
rate changed to $1.36 / package

 

Tobacco Products Tax
1967 tax enacted at 10% of wholesale
1985 rate changed to 15% of wholesale
1988 rate changed to 19% of wholesale
1991 rate changed to 22% of wholesale
2007
(March 16)
rate changed to Cigars: $.50 or 50% per cigar, whichever is lower
Snuff: $1.19 per ounce
All other OTP products: 50% of wholesale

 

 

 

 

 

 

 

 

Motor Fuel / Diesel Fuel Tax
1925 tax enacted at 2¢ / gal. gasoline
2¢ / gal. diesel
1943 rate changed to 3¢ / gal. gasoline
3¢ / gal. diesel
1945 rate changed to 4¢ / gal. gasoline
4¢ / gal. diesel
1953 rate changed to 5¢ / gal. gasoline
5¢ / gal. diesel
1955 rate changed to 6¢ / gal. gasoline
6¢ / gal. diesel
1957 rate changed to 7¢ / gal. gasoline
7¢ / gal. diesel
1965 rate changed to 7¢ / gal. gasoline
8¢ / gal. diesel
1978 rate changed to 8.5¢ / gal. gasoline
10¢ / gal. diesel
1981 rate changed to 13¢ / gal. gasoline
13.5¢ / gal. diesel
1982 rate changed to 13¢ / gal. gasoline
15.5¢ / gal. diesel
1985
(July 1)
rate changed to 15¢ / gal. gasoline
16.5¢ / gal. diesel
1986
(Jan. 1)
rate changed to 16¢ / gal. gasoline
17¢ / gal. diesel
1987 rate changed to 16¢ / gal. gasoline
18.5¢ / gal. diesel
1988 rate changed to 18¢ / gal. gasoline
20.5¢ / gal. diesel
1989 rate changed to

20¢ / gal. gasoline
22.5¢ / gal. diesel
19¢ / ethanol

2002
(July 1)
rate changed to 20.1¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol

2003
(July 1)
rate changed to 20.3¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol

2004
(July 1)
rate changed to 20.5¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol

2005
(July 1)
rate changed to 20.7¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol

2006
(Jan 1)
rate changed to

20.7¢ / gal. gasoline
22.5¢ / gal. diesel
19¢ / gal. Ethanol
17¢ / gal. E85

2006
(July 1)
rate changed to 21¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol
17¢ / gal. E85

2007
(July 1)
rate changed to 20.7¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol & E85

2008
(July 1)
rate changed to 21.0¢ / gal. gasoline
22.5¢ / gal. diesel

19¢ / gal. Ethanol & E85